Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

DEATH OF A MEMBER

Mr. Speaker: I regret to have to inform the House of the death of the right hon. Trevor Alec Jones, Member for Rhondda, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the right hon. Member.

Oral Answers to Questions — TRADE

Exchange Rates

Mr. Knox: asked the Minister for Trade how many individuals and how many organisations have made representations to him in favour of floating exchange rates in the past 12 months.

The Minister for Trade (Mr. Peter Rees): I have received no formal representations during the last year in support of floating exchange rates.

Mr. Knox: Does my hon. and learned Friend agree that international trade was facilitated and that the British economy worked better with fixed exchange rates? What steps are the Government taking to try to bring about greater order in international exchange rates?

Mr. Rees: It is true that Bretton Woods made its contribution to the expansion of trade in the world in the post-war period. We have, however, moved slightly out of that period. I recognise that the EMS has contributed to the stability of exchange rates and has therefore assisted trade within the membership of that mechanism. The Government will, as they have announced, consider joining the EMS at the appropriate moment.

Mr. J. Enoch Powell: Do not recent events demonstrate the wisdom of Her Majesty's Government in staying well clear of the European monetary system?

Mr. Rees: I do not agree with the right hon. Gentleman's conclusion. It is not that the EMS is fundamentally unsound—

Mr. Powell: Yes, it is.

Mr. Rees: —but that the Socialist, monetary and fiscal policies in certain countries will create abnormal exchange rate instability.

Mr. Marlow: Is it possible to have an operative European monetary system if different countries within the European Community follow radically different economic policies?

Mr. Rees: My hon. Friend will have heard me say that one country at least has been following policies that have created monetary and fiscal instability.

Video Tape Recorders

Mr. Jim Marshall: asked the Minister for Trade if he will outline the expected benefits to United Kingdom trade and to United Kingdom consumers of the recent trade agreement between the European Community member states and Japan regarding video tape recorders.

Mr. Peter Rees: Voluntary restraint by Japanese exporters of video tape recorders to the Community should encourage import substitution and the creation of new jobs. Production is now under way through the joint venture between Thorn EMI and JVC, and two other Japanese companies have announced plans to follow suit.

Mr. Marshall: How many jobs are likely to 5e created in the United Kingdom as a consequence of that agreement? Does the Minister agree that the maximum number of jobs created will probably be between 200 and 300, instead of thousands, and that the main benefits of the agreement will go to France and Germany rather than to the United Kingdom?

Mr. Rees: I can give no estimate of the number of jobs likely to be created. That would be highly speculative. However, no doubt those hon. Members with Livingston and Haddington in their constituencies will be reassured by the fact that two Japanese companies are proposing to manufacture video tape recorders there.

Mr. Archer: Does the hon. and learned Gentleman accept the assessment of the Financial Times on 14 February that at present there is no United Kingdom product that is likely to benefit from the arrangement, and that in the foreseeable future there is only the Sanyo product planned to be assembled in Lowestoft and the Mitsubishi product planned to be assembled in Scotland, which will create about 200 jobs? Does he agree that, in the absence of Government action to stimulate development and investment, all that will happen is that the British consumer will be required to pay higher prices for a restricted range of West German products?

Mr. Rees: The right hon. and learned Gentleman will observe that one element of the agreement negotiated by the Commission with the Japanese is to allow the development of a European, and especially a United Kingdom, industry. The right hon. and learned Gentleman seems to imagine, like too many of his right hon. and hon. Friends, that the only way to stimulate industrial development is by pouring in public money. That is not this Government's policy.

Merchant Fleet

Mr. Clinton Davis: asked the Minister for Trade if he will make a statement on the current state of the merchant fleet and on the steps he proposes to take to halt its decline.

The Under-Secretary of State for Trade (Mr. Iain Sproat): As I said in my reply to my hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve) on 18 March, I have concluded that there is no basis for major changes in the Government's shipping policy. Action to deal with the difficult conditions the merchant fleet has to


face must come essentially from the industry itself, in particular from its own efforts to achieve greater international competitiveness.

Mr. Davis: Is the Minister aware that his inertia, characterised by the statement to which he has referred, has pulverised the British merchant fleet more effectively than Hitler's U-boats? Is the hon. Gentleman further aware that his refusal to give details of flagging out is characteristic of that inertia? Why cannot he give those details, and why does that flagging out occur? Why does not the Minister introduce the proposals to avert that disaster that were set out in the Merchant Shipping Bill in 1978, but which were scuttled by the Conservatives after the vote of no confidence in March 1979?

Mr. Sproat: The hon. Gentleman is long on invective and short on facts when he talks about Government inertia. He clearly has not bothered to read my answer of 14 February to my hon. Friend the Member for Tynemouth (Mr. Trotter)—

Mr. Davis: I have.

Mr. Sproat: —where I listed about a dozen things that we had done in the past year alone. Furthermore, the hon. Gentleman clearly has not read a whole series of parliamentary answers, including an answer given only last Friday, which detailed about a dozen more measures that I am taking to reduce the burdens imposed on the fleet. The way forward is for the United Kingdom's Merchant Navy to consider its high manning levels compared with its best European competitors and to cut them, and other crew costs, to make the fleet competitive.

Mr. McQuarrie: Does my hon. Friend know that it is very refreshing that he, as the Minister responsible, should come out strongly telling truths that should have been told a long time ago about what is needed in the Merchant Navy? Does my hon. Friend agree that shipowners and unions should discuss high manning levels and other high crew costs if the decline of the Merchant Navy is to be reversed?

Mr. Sproat: I certainly agree that the decline in the merchant fleet could be halted and reversed if both unions and management saw the truths as clearly as my hon. Friend. What my hon. Friend has said is, indeed, the truth and the sooner both management and unions accept it, the better for the industry.

Mr. Prescott: Does the Minister recognise that that statement will be received with considerable anger by seamen, particularly by those who have returned from the Falklands and who are now told that they must become redundant if they are to save their industry? Does the Minister realise that the price of the industry reducing its manning by 25 per cent. to the level of flag-of-convenience countries, as he is saying it must, is that those countries lose four times as many ships as Britain, which costs the lives of many seafarers, as the inquiry into the Union Star and the Penlee lifeboat now shows?

Mr. Sproat: None of us can know what the inquiry into the Penlee disaster shows, because it has not yet been concluded. However, we are talking not about comparing manning levels with flags-of-convenience ships but, for example, with Norwegian vessels, which are almost on all fours with ours. If the Norwegians can make cuts consistent with safety, so can we. Indeed, that must be done if the United Kingdom's fleet is to be competitive.

Sir John Biggs-Davison: Although I agree that the merchant fleet must become more competitive, is not the size of the merchant fleet important to our maritime defence? May we be assured that the Department of Trade is in touch with and in consonance with the Ministry of Defence?

Mr. Sproat: I gladly give my hon. Friend that assurance, just as I gladly pay tribute—as I have many times—to the way in which members of the Merchant Navy so gallantly conducted themselves during the Falklands war. That is precisely why my Department is playing its part on several committees, together with my right hon. and hon. Friends in the Ministry of Defence, to ensure that our defence requirements are maintained. At present, the Merchant Navy is fully capable of carrying out any wartime commitments that the Ministry of Defence foresees.

Mr. Woolmer: Is it not true that since the Conservative party came to office less than four years ago the number of merchant ships has fallen by 32 per cent., while tonnage has fallen by 36 per cent.? Does the Minister recall telling the House last November that the Government were determined not just to stand idly by as mere spectators of the sad scene of a massive decline in British merchant shipping? Is it not an outrage that the Minister's non-statement of policy should be leaked out in a written answer that took the form of a major statement on Friday? Will the Minister come before the House and give us an opportunity to discuss fully and forthrightly the decline of this island trading nation's merchant marine?

Mr. Sproat: It is sad that when one tries to help the House by putting out a statement in advance of Question Time precisely so that it can be discussed, one is criticised for trying to help the House. However, I shall continue to try to do that. As for any ludicrous charges of inertia, I have done more in 18 months to cut the regulatory burdens placed on the Merchant Navy than the Labour party did in five years when it was responsible for the industry.

Mr. Clinton Davis: On a point of order, Mr. Speaker. In view of the wholly inadequate response from an inadequate Minister, I beg—

Mr. Speaker: Order. The hon. Gentleman knows that there is a formula to use if he wishes to raise the issue on the Adjournment, and references to other hon. Members are not included in it.

Mr. Davis: In view of the unsatisfactory nature of the Minister's reply, I give notice that I intend to raise this matter on another occasion.

"Think British" Campaign

Mr. Marlow: asked the Minister for Trade whether he will meet the organisers of the "Think British" campaign.

The Minister for Consumer Affairs (Dr. Gerard Vaughan): I met the "Think British" council on 9 March. I shall be having regular meetings with it to discuss progress. I am also very willing to meet other bodies active in this subject.

Mr. Marlow: Does my hon. Friend agree with the "Think British" council that if the British consumer bought 4 per cent. more of his goods at home that would lead to


an increase of 350,000 jobs? That being so, will my hon. Friend do all he can to help, in particular by moving further down the line of origin marking? Perhaps we could know when cars have been assembled overseas. Also, will my hon. Friend take urgent and fairly radical action to stop substandard imports into Britain?

Dr. Vaughan: As my hon. Friend knows, we are looking at the origin marking order and its implications. However, I take my hon. Friend's point about the contribution that thinking British can make to reducing unemployment and to supporting our industries. No doubt the House was pleased at the recent success of two British products—British Leyland's Metro and Maestro.

Mr. Arthur Lewis: In the latter part of his reply the Minister said that he would meet other interested people. Will he make a date with the director-general of the BBC, Mr. Alasdair Milne, who is supported by public funds, but who refuses to meet members of Parliament or to answer their letters? He has two large cars and he went to Germany to buy one of them out of public funds. Will the Minister get in touch with the BBC and ask it to think British, particularly in its overseas programmes when people laud to the hilt overseas firms, to the detriment of British buyers and firms?

Dr. Vaughan: No doubt the hon. Gentleman has made his views clear to the director-general of the BBC. As hon. Members know, I am in touch with several major organisations and public figures on such matters.

Several Hon. Members: rose—

Mr. Speaker: Mr. Morris, to ask the next question.

Mr. Beaumont-Dark: On a point of order, Mr. Speaker. Are there to be only one or two supplementary questions on this important issue?

Mr. Speaker: As long as the House gives me the responsibility, I shall decide.

Tourism

Mr. Alfred Morris: asked the Minister for Trade if he will place in the Library a copy of the speech the Minister with responsibility for tourism made to the London tourist board on 17 January.

Mr. Montgomery: asked the Minister for Trade if he will place in the Library a copy of the speech given by the Minister responsible for tourism to the London tourist board on 17 January.

Mr. Sproat: Yes, Sir. Copies of the speech have been placed in the Library.

Mr. Morris: Is the Minister aware that his reference in that speech to abandoning the policy of spreading the economic benefits of tourism more widely throughout Britain caused widespread concern? Is the hon. Gentleman further aware that his written reply last Wednesday announcing additional resources for the London tourist board has also caused concern, not least in the north of England? When will he announce further resources to help the north of England?

Mr. Sproat: The north of England will share in the far greater benefits of the large increase that I have made in section 4 grants under the Development of Tourism Act 1969. I have increased the money that is going not only

to the London tourist board but to all the regional tourist boards—an increase of £100,000. That is greater than the rise in inflation.
I am fully aware of the importance of places outside London in our tourist policy, but the hon. Gentleman must remember that 58 per cent. of the money that foreigners spend in Britain is spent in London. London is our single biggest tourist attraction, and when tourists come here they then visit other places. They would not necessarily come to Britain if we were to advertise Manchester as the first place of interest for tourists.

Mr. Montgomery: Is not the existing dominance of London as a tourist centre largely due to the unreasonable predominance of London's airports? Is it not a fact that about 94 per cent. of all tourists coming to Britain have to pass through London, although about 30 per cent. do not want to stay in London but want to spend their holidays in the regions? Is there not some imbalance between the money allowed for tourism in London compared with in the regions?

Mr. Sproat: No, Sir, there is not. I am sorry to have to answer so bluntly. My hon. Friend has fought hard for Manchester airport and he will know that I have also done a great deal for both scheduled and cargo traffic at Manchester airport, giving it a higher allocation than it has ever had. However, he must face the fact that tourists come to london not because they like Heathrow airport but because they want to see Buckingham palace, the changing of the guard, the Houses of Parliament, and other tourist attractions. If we can get them to come to London in the first place there is a chance that we shall he able to initiate them into the delights of tourist attractions elsewhere in Britain.

Mr. Cyril Smith: What help does the Minister propose to give to airports such as Manchester other than answering questions at the Dispatch Box in a way that seems to be mildly insulting to the north-west of England? If I may say so, we find it insulting to keep hearing such comments about how great London is compared with Manchester airport. What help will he give to Manchester airport and to persuade people—this is the essence—that there are other things in Great Britain besides Buckingham palace, Horse Guards parade and so on, which they should be encouraged to see?

Mr. Beaumont-Dark: The hon. Member for Rochdale (Mr. Smith), for instance.

Mr. Sproat: I am fully aware of that. Anybody representing Aberdeen as I do could not fail to be aware that there is a great deal outside London. I must say—I am sure that my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) will back me up on this—that to accuse me of not having done anything for Manchester airport, when I have given it the Iberian scheduled service, the Ward air cargo service, and £153 million for regional airports since the Government came to power, is ludicrous and shows how badly out of touch the Liberal party is with the realities of life.

Sir Julian Ridsdale: Will my hon. Friend have another look at Government policy? Does he realise that many hon. Members think that he is placing far too great an emphasis on London? Is it right to initiate a policy that takes from the tourist industry the port of entry assistance that has worked so well in the past few years?

Mr. Sproat: I am happy to tell my hon. Friend that although the English tourist board has withdrawn its help from Harwich, the regional district board and the local authority have taken over its work. That shows that our policy is right. I have already made the point that London is our single major attraction. It also draws into Britain people who can then visit Harwich and other places.

Mr. John Fraser: Now that the pound is at a historically low level, when does the Minister expect last year's deficit of £400 million on tourism to return to the healthy surpluses that existed under the Labour Government?

Mr. Sproat: It is true that the year before last our tourist balance of trade went into deficit for the first time for 16 or 17 years. I do not think that the Labour party can take any credit for that. With the change in the pound-dollar relationship there is an even better incentive for us to have American tourists. Perhaps the hon. Gentleman is not aware that even last year there was a 7 per cent. increase in tourists from America. I hope that he will rejoice with us about that instead of making cheap party political points.

Balance of Trade

Mr. Peter Archer: asked the Minister for Trade what was the balance of trade for the last month for which figures are available; and if he will make a statement.

Mr. Peter Rees: The United Kingdom had a visible trade deficit of £491 million in January. The estimated monthly surplus on invisible trade amounted to £230 million.

Mr. Archer: Can the hon. and learned Gentleman confirm that in January there was a deficit on non-oil visible trade of over £1 billion and an overall deficit of £261 million? Will he also confirm that despite an oil surplus for 1982 of £4·6 billion the overall balance was only £3·9 billion, showing an overall deficit if it were not for oil? How can he reconcile that with the Secretary of State's reference on 31 January to what he was pleased to call
the outstanding performance of our overseas trade in 1982"?
Will the Government now consider it possible that they may be wrong?

Mr. Rees: The right hon. and learned Gentleman should take comfort from the fact that we have had record surpluses for the past three years and should not draw too many conclusions from one month's figures. Oil has made a contribution to our export figures but so, for example, has invisible trade. The right hon. and learned Gentleman trumpets about the Government being wrong, but he has not said in what regard.

Mr. Squire: As the right hon. and learned Member for Warley, West (Mr. Archer) has referred to the 1982 figures, will my right hon. and learned Friend confirm that on a similar basis—imports and exports—we showed a £2 billion surplus on manufactures, which is precisely the area which the Labour party spends so much time highlighting and on which it claims we were not doing very well?

Mr. Rees: My hon. Friend makes a valid point. May I reinforce it for the benefit of the House and the right hon. and learned Member for Warley, West (Mr. Archer)?

While world trade in manufactured goods in 1982 shrunk by 3 per cent., the volume of exports of United Kingdom manufactured goods increased by 1 per cent. That seems to demonstrate that manufacturing industry is not in such a bad state as the Opposition would have us believe.

Mr. Hoyle: Will the Minister not be so complacent about such matters? Does he not realise that manufacturing industries have been having a bad time, largely due to imports? Would it not be more effective to plan our trade and protect vital sectors of British industry, such as the motor, steel and paper industries? If nothing is done there will soon be no paper industry in Britain.

Mr. Rees: The hon. Gentleman and his right hon. and hon. Friends do not say how, if we were to plan our exports, which I suppose is a euphemism for protectionism, we could prevent other countries employing the same tactics against us. As we export about 30 per cent. of our gross domestic product—more than any other developed country in the world—we would suffer from such planning, which would lead to a trade war.

Mr. Forman: Does my hon. and learned Friend agree that, in our efforts to preserve and improve our trade balance, it is vital to continue to deal with the problem of non-tariff barriers? Is he as worried as I am about the fact that the United Nations conference on trade and development recently demonstrated that there are about 21,000 products in the world to which non-tariff barriers now apply? What plans do the Government have to reduce that number, which cannot be for the good of free trade?

Mr. Rees: My hon. Friend makes an important point. It can fairly be said that about 7 per cent. of the United Kingdom's imports are subject to some kind of non-tariff barrier. I am devoting a great deal of thought to the internal market councils of the EC, which are designed to eliminate precisely that type of barrier.

Film Industry

Mr. Dormand: asked the Minister for Trade if he will make a statement on the progress of the Government's review of its policies towards the film industry.

Mr. Sproat: I have seen many interested organisations and individuals in the course of my review, and there are some meetings still to take place. A statement will be made as soon as the review is complete and I have considered it.

Mr. Dormand: Will the Minister give an assurance that he is considering whether television should make a direct and substantial contribution to the film industry? Is it not intolerable that television should be making so much use of film and yet contributing not one penny towards the film industry?

Mr. Sproat: Yes, I am looking at the first point raised by the hon. Gentleman, although I shall certainly not make up my mind at this stage whether to accept or reject the arguments which, by implication, he makes. The hon. Gentleman's second point has also been made to me by many individuals and organisations and I am considering it.

Mr. Woolmer: Does the Minister accept that Labour Members recognise the achievements and the high standard of the British film industry, which serves not only


cinema and television, but, increasingly, the video industry? Will he accept that his review of the film industry must provide for two basic objectives: first, a coherent framework for Government policy in place of the present fragmented response of different Departments; and, secondly, a more substantial, more stable and fairer basis of financial support for the film industry, reflecting, as my hon. Friend the Member for Easington (Mr. Dormand) said, its importance not only to cinemagoers but to television, video and, increasingly, cable television viewers?

Mr. Sproat: I am taking all such matters into consideration.

Mr. Eggar: Was not the decision of my right hon. and learned Friend the Chancellor to extend capital allowances for a further two years welcome to the television and film industries?

Mr. Sproat: Yes, it was. I am glad that last night Sir Richard Attenborough praised that step. It shows how seriously this Government take the film industry.

Car Exports (Spain)

Mr. Aitken: asked the Minister for Trade what progress has been made in reducing the tariff levied by the Spanish Government on British car imports; and if he will make a statement.

Mr. Les Huckfield: asked the Minister for Trade whether he will make a statement on the current position on negotiations on Spanish car imports.

Mr. Peter Rees: I refer my hon. Friend the Member for Thanet, East (Mr. Aitken) to the written answer that I gave to my hon. Friend the Member for Beaconsfield (Mr. Smith) on 16 March.
I was glad to be able to announce in that answer the decision of the Spanish Government to open shortly a reduced duty quota of 15,000 cars from the Community. For cars between 1300 cc and 1600 cc the quota will be 5,000 and the duty will be almost halved to 19 per cent. For cars between 2000 cc and 2600 cc the quota will be 10,000 and the duty will be reduced by about one third to 25 per cent.

Mr. Aitken: Is my hon. and learned Friend aware that the new tariff quotas that he has announced will be seen as a long-overdue step towards removing the unfair discrimination by the EC relating to British cars going to Spain? Does he accept that there is still a long way to go before we achieve the principle of tariff equality? Will my hon. and learned Friend assure the House that in the interests of the British car manufacturing industry he will be vigilant in his efforts to press for that principle?

Mr. Rees: My hon. Friend is right. This Government have been anxious—as have various of my hon. Friends, in particular my hon. Friends the Members for Birmingham, Selly Oak (Mr. Beaumont-Dark) and for Bromsgrove and Redditch (Mr. Miller)—to reduce the tariff disparity between the European Community and Spain. We welcome the announcement by the Spanish Government. It provides British Leyland once more with the possibility of breaking into the Spanish market. In the long term, the disparity will be removed completely when Spain becomes a full member of the European Community.

Mr. Huckfield: Is the Minister aware that although his announcement is welcome, it deals with only one part of the problem? It does not deal with completely assembled Spanish units coming here. Does the hon. and learned Gentleman accept that since the Government took office, although there has been a certain amount of stability in Japanese, West German and French completely assembled units coming here, the number of Spanish completely assembled units coming here has almost doubled? When will he do something about too many Spanish cars, particularly the Vauxhalls, coming into Britain?

Mr. Rees: I can reassure the hon. Gentleman. Spanish car imports have dropped by 10,000 each year over the past three years, and we have a healthy surplus in sales of components to Spain.

Mr. Beaumont-Dark: Does my hon. and learned Friend realise that many of us recognise the tremendous amount of hard work that he has put into negotiations to get us this far, but does he accept that it is somewhat less than some of us hoped for, particularly in relation to small cars, such as the Metro? Will he bear in mind that, in the arrangements being made for Spain to join the Common Market, it would be unsatisfactory to have a long transitional period in which the Spanish were allowed to pillage our car market?

Mr. Rees: I am grateful to my hon. Friend for his kind words, particularly since he has been such a vigorous defender of the interests of the British motor car industry in the west midlands. He will be aware that the arrangement offers scope for British Leyland to sell the larger Metro and the Maestro on the Spanish market. I hope that when it has rebuilt its dealer network that will be done on a successful scale. I take note of what my hon. Friend said about the length of the transitional period.

Mr. Archer: Does the Minister recognise that the arrangement falls far short of what is required to achieve reciprocity between duties of 19 and 25 per cent., a converse duty of 4·4 per cent., and the fact that there is no concession on cars under 1275 cc? Has the hon. and learned Gentleman made clear to our EC partners and to the Spanish Government that it is no more than an offer on account of what is clearly required?

Mr. Rees: It may be an offer on account, but it is a very useful offer. We should not look gift horses in the mouth. When the transitional period is over we shall be in a position of complete equality. I hope that in the meantime British Leyland will be able, on the basis of the offer by the Spanish Government, to rebuild its dealer network. We can then judge the adequacy or otherwise of the present arrangements.

Sir Peter Emery: Is it not a fact that, prior to the start of negotiations for Spain to enter the Common Market, it was agreed that the status quo on tariff arrangements should remain until the negotiations were completed? Is not the arrangement a considerable achievement for the British motor car industry? Of course it does not go far enough, but should we not praise the Government for what they have obtained?

Mr. Rees: I thank my hon. Friend for his kind words. Since the unilateral offer by the Spaniards has been achieved independent of negotiations for entry, my hon. Friend's observations are well founded.

Mr. Roy Hughes: Will the Minister seek an early meeting with British motor car manufacturers and urge them to use more British steel in their products, since in quality, finish and delivery dates it can meet any challenge from the continent, as I am sure Mr. Ian MacGregor, chairman of the BSC, will readily testify?

Mr. Rees: I am sure that our British motor car manufacturers will take full note of the hon. Gentleman's warm commendation, which I fully endorse.

London (Tourism and Infrastructure)

Mr. Haslehurst: asked the Minister for Trade what relative priority Her Majesty's Government now give to London in spending on tourism and infrastructure.

Mr. Sproat: I am currently reconsidering in my general tourism review the policy which has existed since 1974 of concentrating resources away from London and other popular tourist destinations. I have already announced to my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies) on 16 March that I have asked the English Tourist Board to increase its existing levels of support for all the regional tourist boards in the next financial year, and in particular to give some additional funds to the London tourist board in view of London's prime position as our single most important tourist destination and the main gateway to other parts of the country.

Mr. Haselhurst: If we are to exploit to the full the job-creating aspects of tourism, is it not unwise to continue to rely on the single principal funnel of London as a route for visitors to Britain? Do we not require a more determined marketing effort to sell the regional qualities of the other parts of our country, because through the London funnel people trickle only as far as Stratford, Oxford and Cambridge? Is it not uncharacteristic of my hon. Friend to come to the opposite conclusion? Is he not being rather defeatist?

Mr. Sproat: There is no question of London being the only funnel—perhaps not the most appropriate word. Direct flights from abroad arrive at Prestwick, Manchester and even at Aberdeen, where we recently granted increased flights to SAS. We are conscious that London is not the only gateway for tourists, but, whether we like it or not, it happens to be the most important single gateway. When people come to London, they can spread out to the rest of the country. It is no use taking some little-known place in the United Kingdom, of which I shall not give an example for reasons of tact, advertising it in the United States or Japan, and encouraging people to come to that tiny place. We must advertise what is best so that, when people are here, they will see the other resources that we have on offer.

Mr. William Hamilton: In view of Mr. Egon Ronay's scathing comments on food in London restaurants and other catering establishments, will the Under-Secretary of State advise tourists that, if they have any respect for their stomachs, they should stay away from London?

Mr. Sproat: No, I will not give that advice. However, as soon as I read of Mr. Ronay's charges this morning I asked my private office to contact Mr. Ronay to invite him to meet me to tell me all about them. I also asked the London tourist board immediately to give me its reaction to the charges.

Mr. Kenneth Carlisle: Is my hon. Friend aware that his support for the regional tourist boards is greatly welcomed, especially by the East Midlands tourist board? Is he further aware that the boards need to know fairly soon what grants they are to get so that they can plan constructively for the coming months?

Mr. Sproat: I am grateful to my hon. Friend for underlining once more that we are redeploying resources so that the regional tourist boards receive more grant in the coming year than hitherto—£100,000 more than inflation would set as a figure. I hope to tell the House of the conclusions on the tourism review next month.

Mr. Dormand: Is the Under-Secretary of State aware that I agree to a large extent with his comments about London? Whether we like it or not, tourists will come to London. Is that not an important reason why he should give the regions even more money? In the area that I represent, the Northumbria tourist board can offer immense attractions, at least as important as those in London? Bearing in mind unemployment in Northumbria, is there not a case for providing greater Government grants to attract tourists to the area?

Mr. Sproat: I am grateful for the hon. Gentleman's agreement with my general comment about the importance of London. I agree that the regional tourist boards should receive more money, and more money is what they will receive next year.

Oil Prices

Mr. Allen McKay: asked the Minister for Trade if he will estimate the effects upon the balance of trade for the current year of the recent changes in the price of oil.

Mr. Peter Rees: No, Sir. It is not possible to make a reliable estimate in view of the many uncertainties involved.

Mr. McKay: In view of the uncertainties, and bearing in mind that the Government's economic policy has been saved from complete collapse by North sea oil—oil production, which is expected to peak in about 1985, will have consequences for the oil trade and tax revenues and that will lead to a further decline—what steps has the Minister taken, or what steps is he about to take, to ensure that our non-oil trade recovers sufficiently to make good the deficit?

Mr. Rees: I do not know what the hon. Gentleman has in mind. As I have said on many occasions, we have had three years of record surpluses on our current account. It is clear that the hon. Gentleman has overlooked that fact. What further recovery does he have in mind? I remind the House that my right hon. and learned Friend the Chancellor of the Exchequer, in his Budget statement, said that North sea oil accounts for only 5 per cent. of our national income and raises in tax only 6 per cent. of Government revenue. We must get the problem in perspective.

Mr. J. Enoch Powell: Will the Minister confirm that, despite the statistical difficulties in answering the question, it is a fact that our net oil trade is only one of the factors that have contributed to the major current account surplus of the past three or four years?

Mr. Rees: I am very ready to confirm that fact. One element that Opposition Members—but not the right hon. Gentleman—constantly overlook is the contribution that is made by our service industries.

Common Agricultural Policy

Mr. Park: asked the Minister for Trade if he will assess the impact on the different elements in the balance of United Kingdom visible and invisible trade in 1982 of the common agricultural policy of the European Community.

Mr. Peter Rees: No, Sir. It would be quite impossible to make any meaningful assessment of this kind.

Mr. Park: Is the Minister aware that the common agricultural policy now costs Britain over £2 billion annually, this sum coming from United Kingdom taxes and going straight into the EC budget? To rub salt into the wound, British consumers have to pay considerably more for their food than current world prices would justify.

Mr. Rees: I think that the hon. Gentleman's observations would be better directed at my right hon. Friend the Minister of Agriculture, Fisheries and Food. I take note of his remarks, but they do not seem to have any great bearing on our trade flows.

Mr. Nelson: Will my hon. and learned Friend confirm that, over the past year or so, there has been a significant shift within the common agricultural policy in the funding of surplus production from products such as wheat and milk towards Mediterranean-type products such as wine and olive oil? Will that not be of major significance in the extent to which we benefit in future from the budget contribution that we make to the CAP? Does it not presage the case for an early review of the mechanism?

Mr. Rees: My hon. Friend makes a good point. As I have said, these are matters for my right hon. Friend the Minister of Agriculture, Fisheries and Food and for my right hon. and learned Friend the Chancellor of the Exchequer. I have no doubt that they will take full account of these matters when considering our policy towards the European budget.

Mr. Woolmer: Bearing in mind the substantial cost of the common agricultural policy to our taxpayers and consumers, why are the Government supporting the EC in its threat of a major agriculture surplus trade war in the negotiaions with the United States? How can that possibly be in the interests of the British consumer or taxpayer?

Mr. Rees: An agriculture surplus trade war would be of no benefit to the United Kingdom, the rest of the European Community or the United States. I remind the hon. Gentleman that the United States, perhaps in different ways, supports its agriculture to much the same degree as the EC supports its agriculture, and that the Community is the best export market for United States agricultural products.

Quality Mark System

Mr. Neil Thorne: asked the Minister for Trade what progress has been made towards a more extensive and effective British quality mark system; and if he will make a statement.

Dr. Vaughan: The possibility of a British quality mark is being considered in the light of comments received

following publication of the White Paper on standards, quality and international competitiveness—Cnmd 8621. We hope to announce our conclusions shortly.

Mr. Thorne: What steps does my hon. Friend propose to take to ensure that Britain takes the lead in setting standards in Europe instead of having other standards imposed upon us?

Dr. Vaughan: I believe that British products are of the highest standards. We are determined to develop our national reputation of producing goods of high quality and safety both in Europe and elsewhere. We can increase our competitiveness both at home and overseas through a better use of British national standards.

Mr. John Fraser: Will the Minister consider extending quality marking to footwear, textiles and carpets? Secondly, when these quality standards are established, will he encourage public purchasing authorities to buy to those standards, because that will lead to more trade in British goods?

Dr. Vaughan: We are encouraging public purchasing authorities to buy goods of British standards. Our national standard BS 5750 is gaining wide recognition. This is evident from the 5,500 companies on the register of quality-assessed United Kingdom manufacturers.

Merchant Fleet

Mr. Woolmer: asked the Minister for Trade what was the percentage change in the size of the United Kingdom merchant shipping fleet from 1 January 1979 to the latest available date.

Mr. Sproat: Between 1 January 1979 and 31 December 1982 there was a reduction of about 34 per cent. in terms of deadweight tonnage.

Mr. Woolmer: Are not these figures a demonstration that the Minister's written answer on Friday was a betrayal of the British interest as a maritime nation? It is as if a major continental country were willing to see most of its railways ripped up and destroyed and much of the remaining railways sold off and placed under foreign control. The Under-Secretary is turning out to be not so much a mouse that roared as a paper tiger that cannot even squeak.

Mr. Sproat: I shall ignore those complicated similes and remind the hon. Gentleman that although our Merchant Navy has declinmed, that is also true of the Merchant Navies of Norway, France, Germany and Sweden. The Swedish Merchant Navy, for examnple, has declined by 46 per cent. The decline is not confined to Britain. It is worldwide, because of the world recession and world overtonnaging. The main answer is for the British fleet to make itself more competitive in ways which I have already underlined—for example, directing its attention to extra crew costs and overmanning.

Mr. Colvin: Does my hon. Friend agree that, although there is a long seafaring tradition in this country, people still own ships to make money, not for patriotic reasons? What are the Government doing to remove some of the financial and bureaucratic obstacles against registration of ships in the United Kingdom?

Mr. Sproat: Patriotism still plays a large part in the attitude of shipowners and seafaring unions. We saw this splendidly exemplified during the Falklands war.
What are we doing to remove regulatory burdens—for example, the cost of transferring from one flag to the British flag? I recently set up a working group to ascertain how to reduce the burden on the British shipping industry. That reduction in the burden is to be made, together with about a dozen other proposals that I have put forward in the past few months alone.

Merchant Fleet (Representations)

Mr. Dalyell: asked the Minister for Trade, following his letter to the General Council of British Shipping and the National Union of Seamen inviting them to put their views on the lessons to be learnt from the involvement of merchant ships and Merchant Navy personnel in the task Force, what consideration he is giving to their detailed suggestions.

Mr. Sproat: I have held meetings with and written to the General Council of British Shipping, the National Union of Seamen and the other maritime unions. I am still considering some of their detailed suggestions.

Mr. Dalyell: Following the Minister's answer on Friday at c. 291 of Hansard, has he seen the representatives of the Merchant Navy and Airline Officers Association, who say that they are alarmed to read the comments by the military that they were expecting far higher casualty rates and loss of ships than occurred during the south Atlantic conflict? That could only mean that the Government were prepared to sacrifice merchant ships and seafarers in the exercise. It was a unilateral decision and there were no discussions between the professional associations—

Mr. Speaker: Order. The hon. Member must ask a question.

Mr. Dalyell: Why were there no discussions between the National Union of Seamen, the Merchant Navy and Airline Officers Association and others involved before these decisions were taken?

Mr. Sproat: The general thrust of the hon. Gentleman's question is offensive rubbish. What was said by my right hon. Friend the Secretary of State and Ministers in the Ministry of Defence is a matter for them.

Oral Answers to Questions — OVERSEAS DEVELOPMENT

Blankets

Mr. Ginsburg: asked the Secretary of State for Foreign and Commonwealth Affairs what number and value of blankets were bought for the overseas aid programme in the last year; and what are his plans for forthcoming years.

The Minister for Overseas Development (Mr. Timothy Raison): Since August 1981 over 40,000 blankets costing about £150,000 have been bought from British aid funds for disaster victims.
In addition, our cash donations to various disaster appeals will have been used in some cases to buy blankets. We have also supplied some blankets within other aid projects, but no central record is kept on these.
I shall continue to supply blankets whenever this is a useful part of our disaster relief work.

Mr. Ginsburg: I am pleased to hear that news, even though it is not complete. Is the Minister aware that

Dewsbury makes excellent blankets and that there are many more available to enable the Government to fulfil the requirements of the disaster programme?

Mr. Raison: I note the hon. Gentleman's plug for his constituency.

Mr. Beaumont-Dark: I am sure that my right hon. Friend is aware of the tragedy that is enveloping Ethiopia once again. Will he assure the House that it is much upon this country's conscience to do what it can to help? If this country and other relatively prosperous countries do not help, hundreds of thousands of people will starve yet again.

Mr. Raison: I am well aware of what has been happening there. On Friday I announced that we were supplying £250,000 for relief.

Commonwealth Development Corporation (Philippines)

Mr. Canavan: asked the Secretary of State for Foreign and Commonwealth Affairs what is the total value of projects in the Philippines being assisted by the Commonwealth Development Corporation.

Mr. Raison: The total is £11·4 million: a loan of £5 million to the Private Development Corporation of the Philippines and a loan of £6.4 million to the National Development Corporation—Guthrie Plantations Inc. for an oil palm project.

Mr. Canavan: Is there still time for the Minister to postpone final approval of the CDC plan to invest in a plantation project at La Paz and Loreto until he has investigated reports of the appearance of armed groups of paramilitaries similar to the Lost Command who resort to extortion from and intimidation of workers? Will the Minister take steps to ensure, if possible, the removal of any such terrorists from the area before the CDC receives the final go-ahead for its investment plans?

Mr. Raison: The project is going ahead. Both the CDC and I are satisfied that the arrangements that it has made for monitoring the undertakings that it received will be effective. The CDC has the right to withhold loan disbursements after 30 June if those undertakings are not observed to its satisfaction.

Mr. Bowen Wells: Does my right hon. Friend agree that the proposed investment by the CDC in the Philippines will improve the economy and produce for the first time in that poor area a cash crop which will so strengthen the peasants that they will be able to resist the blandishments and force of the paramilitary groups that have been operating there?

Mr. Raison: I believe that my hon. Friend is right. The new security force is being trained and should replace the present one by the end of June.

Gibraltar

Mr. Brocklebank-Fowler: asked the Secretary of State for Foreign and Commonwealth Affairs what is his latest estimate of the total official development assistance to be made available for development in Gibraltar during the present financial year; and if he will make a statement.

Mr. Raison: I expect that total development assistance to Gibraltar in the present financial year will be about £2


million. This includes initial expenditure on projects being financed from the £13 million development aid grant which was agreed last year.

Mr. Brocklebank-Fowler: In view of the uncertainties about the implementation of the Lisbon agreement and the importance of Gibraltar having a viable economy without overdependence on Spain, will the Minister develop and publish a development plan for the economy dealing particularly with land use? Is it not a public disgrace that the admiral commanding the dockyard occupies a garden of some 3·5 hectares of developable land and that Rosia bay, probably the principal development site on the island, is used for a civil servants' swimming club? Will he look into these matters?

Mr. Raison: I shall consider, but with some scepticism, the point made by the hon. Gentleman in the last part of his question. Overall we have allocated a reasonable sum for the development of Gibraltar. I believe that it should do the job effectively.

Mr. McQuarrie: I hope that my right hon. Friend will agree that the comments made by the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) about the garden and Rosia bay show his utter ignorance of what is happening in Gibraltar. We want the economy of Gibraltar—

Mr. Speaker: The hon. Member must ask a question.

Mr. McQuarrie: Does my right hon. Friend agree that £13 million is inadequate for the future economy of Gibraltar and that it is high time we had a decision on whether the naval dockyard is to be commercialised?

Mr. Raison: As I have already said, I believe that we have allocated a reasonable sum for development which will do the job. The commercialisation of the dockyard is complicated and should be considered carefully. I hope that before too long we shall be able to announce our conclusions.

Mr. Sever: Does the Minister agree that the most effective way to help Gibraltar, and any other country seeking development aid, is for the Government to authorise immediate expenditure of 0·7 per cent. of gross domestic product to cope with the schemes mentioned by hon. Members? Does he accept that money being spent on aid programmes would be better directed to the poorest countries and that it cannot be argued that Gibraltar is one?

Mr. Raison: I believe that the hon. Gentleman is straying a long way from this question.

Afghan Refugees

Mr. Teddy Taylor: asked the Secretary of State for Foreign and Commonwealth Affairs if he will increase the aid commitments to Pakistan for 1983 to assist with the Afghan refugee problem; and if he will make a statement.

Mr. Raison: As my right hon. Friend the Prime Minister, in a written reply to my hon. Friend on 24 February, said:
We remain deeply concerned about the plight of the Afghan refugees."—[Official Report, 24 February 1983; Vol. 37, c. 501.]
I am glad, therefore, to announce today a further contribution of £2 million to be paid to relief agencies

working with the refugees. This brings the total value of our commitments since January 1980 to £13·7 million. In addition, we are providing aid costing over £16 million for Pakistan's border provinces of North-West Frontier and Baluchistan, which are the areas most seriously affected by the influx of refugees.

Mr. Taylor: I welcome my right hon. Friend's splendid announcement. However, does he agree that the magnitude of the problem, when one third of Afghanistan's population have moved out, with 3 million going to Pakistan, calls for an extraordinary effort to be made, not just by the Government, but by as many of our friends in the free world as we can contact? Will my right hon. Friend draw the Government's generosity to the attention of the countries of the Commonwealth, the Common Market and the United States of America and suggest that others should give as generously as we have done?

Mr. Raison: I am grateful to my hon. Friend for his kind words. I shall certainly consider the point that he has just made. There is no doubt that 3 million refugees from Afghanistan represent one of the most disgraceful episodes of recent history.

"Common Crisis"

Mr. Welsh: asked the Secretary of State for Foreign and Commonwealth Affairs what is the policy of Her Majesty's Government towards the proposal made in the Brandt commission's report "Common Crisis" that the Organisation for Economic Co-operation and Development aid-givers should reach the target of 0·7 per cent. of gross national product within five years.

Mr. Raison: We remain committed to the target of 0·7 per cent. of gross national product for British official development assistance, but, like the previous Government, we have made it clear that we are not committed to a timetable for its achievement.

Mr. Welsh: Is the Minister aware that other countries, including the Netherlands and those in Scandinavia, contribute a much higher percentage of their GNP? Is it not false for a great country such as Britain to say that it cannot set a reasonable timetable for achieving the development assistance target? With a percentage of 0·44 of GNP, we are one of the lowest in the league table of advanced countries.

Mr. Raison: I am aware that some countries give a higher percentage of their GNP, but for 1981 the OECD average was 0·35 per cent. against our contribution of 0·44 per cent. We were above the average level.

Mr. Rhodes James: Is my right hon. Friend aware that this country has made, and perhaps will again make, an even greater contribution through preventive medicine? As one of the recommendations of the Brandt commission relates to work being done by British voluntary agencies, can my right hon. Friend tell us how greater Government assistance could be given to those agencies?

Mr. Raison: I am prepared to consider that matter carefully, and I should like to talk to my hon. Friend about it.

Mr. Guy Barnett: Will the Government be publishing a White Paper giving a detailed point-by-point response to "Common Crisis"?

Mr. Raison: I expect that before long there will be a debate in the House, during which the Government will make clear their views on "Common Crisis".

Tributes to Staff

Mr. Arthur Lewis: On a point of order, Mr. Speaker. I shall write to you in more detail about this matter, but will you consider whether there is a way in which you can pay tribute on the Floor of the House to your staff, particularly when they go out of their way to help hon. Members? On the many occasions when hon. Members wish to pay such tributes they have difficulty in doing so. If I write to you, perhaps you will ensure that the tributes are paid, because the staff deserve them.

Mr. Speaker: I am much obliged to the hon. Gentleman. I shall await his letter.

Teaching Quality

The Secretary of State for Education and Science (Sir Keith Joseph): With permission, Mr. Speaker, I wish to make a statement about the Government's policies and actions to improve teaching quality in schools in England and Wales by the better use of the resources available. These are set out in a White Paper which my right hon. Friend the Secretary of State for Wales and I are publishing today. Copies are available in the Vote Office.
Our first objective is to improve the arrangements for teacher training. Last November I announced changes in the structure of the initial training system in England which are designed to match the supply of newly trained teachers to the needs of both primary and secondary schools over the next few years, both in quality and in quantity. My right hon. Friend will soon be announcing his decision for the system in Wales.
We shall now use our power to approve initial training courses to improve their content and structure, a matter on which we are indebted to the valuable advice of our partners in education, through the Advisory Committee on the Supply and Education of Teachers, and to the work of Her Majesty's inspectors. We accept the committee's recommendation that initial training courses should in future be approved on the basis of explicit criteria. Newly trained teachers will be expected to have greater knowledge and expertise in the subjects they are to teach, as well as more practical experience, and will have to provide satisfactory evidence of classroom competence.
The training institutions will be expected to improve their arrangements for selecting students and to demonstrate that their staff have recent successful experience of teaching in school. We may now look forward to the committee's advice on the details of the new criteria and intend to apply these to new course proposals and in reviewing existing courses during the academic year beginning in September 1983.
Our second objective is to improve the deployment of teachers so that their pupils can obtain full benefit from what they have to offer. We shall record in formal letters from the Department the subjects and the ages of pupils for which new teachers have trained. We shall bring forward amended regulations to require local education authorities to have more regard to the formal qualifications of teachers, as they relate to specific subjects and age ranges, when they appoint them to particular posts; and we shall ask Her Majesty's inspectorate to keep under review the operation of this requirement.
It is also in the interest of the pupils that local education authorities should pursue positive policies in managing their teacher force at a time when resources are limited and teacher numbers must fall because pupil numbers are falling. Authorities need to use the various management instruments at their disposal in a planned and sensitive way, so that the inflow of able recruits is maintained, and so that teachers are deployed where they can best serve the pupils.
At the same time, authorities need to make it possible for serving teachers to continue their professional development through in-service training. Additional provision has been made for that in the Government's expenditure plans.
The schools depend crucially on the professional skill and commitment of the teachers. The Government believe that the White Paper provides a sound basis for enabling the teachers in our schools to serve their pupils as the nation, and they themselves, would wish.

Mr. Frank Dobson: Everyone on the Opposition Benches favours higher standards of education and higher standards of teaching performance. Secondly, we welcome the Secretary of State's recognition that educational standards are threatened and that last year's report by Her Majesty's inspectorate showed that numeracy and literacy were at risk in primary schools and that the curriculum was being severely curtailed in secondary schools.
The Secretary of State's statement talks only of the better use of existing resources. We believe that more resources are needed and we should like the right hon. Gentleman to tell us whether the Treasury will make available the funds that will be necessary to put flesh on the bones of the White Paper.
We also welcome changes in teacher training. Better selection procedures and better assessment of the capability of student teachers are obviously to the advantage of children and teachers, but we suggest that there is too great an emphasis in the Secretary of State's thinking on specialisation in academic subjects and that that does not reflect the problems that our teachers face in the classroom.
The statement refers to making training more specific so that teachers would, in effect, qualify to teach only specific subjects. That may sound fine, but how does the Secretary of State reconcile that with the fact that, because of the cuts in resources, more and more schools are faced with a mis-match of teachers and subjects because that is the only way in which they can cope with the reduction in the number of teachers?
The Secretary of State would have us believe that there are positive policies for LEAs in managing the teaching force. He says—not in the statement, but outside the House—that he wants to identify poor teachers. We want to know what he proposes to do after he has identified such teachers. Many of those teachers would accept that they need increased in-service training, but, under the right hon. Gentleman, in-service training has been reduced. According to the inspectorate's report, such training is unsatisfactory in 43 of the 96 education authorities. Induction courses for new teachers have been reduced, so that only 33 authorities are making satisfactory provision. The report says that advisory services for new and existing teachers are unsatisfactory in 47 education authorities.
The Secretary of State refers to the importance of the professional skill and commitment of teachers. Has he consulted teachers' representatives? Why has he not issued a Green Paper rather than a White Paper? Would he have treated any other profession in this way? Would he or his ministerial colleagues have announced changes in the training of lawyers or doctors without consulting those professions?
The right hon. Gentleman has also asserted that the proposed changes will bring about improvements in teaching standards. Does he accept that there will be a considerable time lapse before the changes have any effect?
Does the right hon. Gentleman accept that if he wants to bring about immediate improvements in teaching standards in schools he should act now to improve teacher morale? Does he accept that of late teacher morale has been severely hampered by the denial of resources and opportunities to teachers by ministerial speeches that have derided their efforts and by the siphoning off of children and resources under the assisted places scheme? Does the Secretary of State accept that the best thing that he could do now to improve teaching standards would be to give the necessary resources and support to our teachers, most of whom are working hard in more and more difficult conditions, despite all the efforts that he and his colleagues are making to make their problems greater?

Sir Keith Joseph: The hon. Gentleman seems to have caught some of the verbosity of his colleague, the hon. Member for Bedwellty (Mr. Kinnock), who is not here today. The White Paper is about teacher training. There is no need for more resources for teacher training. There is a need for better use of existing resources. The inspectorate has criticised the expertise in their subjects of a minority of new teachers emerging from teacher training colleges. That is why it is right to emphasise the need for expertise in the main subjects taught. We are not laying down that every teacher can teach only his own or her own subject. We are laying down that local education authorities should take into account the formal training of the teacher in the appointments that they make.
Mis-match has been with us for a long time. The White Paper will help to reduce mis-match, but above all there is a need for sensitive redeployment and management by local education authorities of their teaching staff. The Government have provided extra specific grant money of £7 million a year for additional teacher training. However, when a poor teacher cannot be made into a good one by extra in-service training, it is the duty of the local education authority, in the ultimate, to dismiss the bad teacher—bad teachers are a small minority in our teaching force—for the sake of the children.

Mr. A. J. Beith: The Secretary of State's objectives may be welcome, but does he realise that few people believe that they can be carried out against the background of the education cuts? Does he agree that it will be impossible for local authorities to practise the positive deployment of teachers when new jobs or vacancies are having to be filled by redeployed teachers already in the employment of the local authority? Does the right hon. Gentleman recognise that, while it is desirable for teachers to teach age groups for which they are properly trained, it is much more difficult to do so against the background of the present cuts? How can there be more in-service training in regions where most, if not all, colleges of education have been closed, such as in the north-east of England?

Sir Keith Joseph: I repeat that the White Paper is about teacher training. At the moment there are lower pupil-teacher ratios than ever before. The hon. Gentleman speaks of cuts, but more money in real terms is being spent per child in schools than ever before and pupil-teacher ratios are at record low levels. Therefore, I deny the background to which the hon. Gentleman refers.

Sir William van Straubenzee: Does my right hon. Friend understand that there will be a


widespread welcome to this yet further step in a direction that is particularly important to parents, always remembering, as my right hon. Friend reminded the House, the large number of teachers who at the moment are teaching with great competence and skill? Does my right hon. Friend understand how welcome is the emphasis that he seems to be placing on the practical and personal qualities as well as on the academic competence of would-be teachers? Does he see a greater association of the teaching profession with the selection process?

Sir Keith Joseph: I am grateful to my hon. Friend. My answer is yes, indeed. In the White Paper we emphasise the importance of increasing teaching practice during teacher training and of associating experienced classroom teachers with the selection of student teachers.

Mr. Christopher Price: Why did the Secretary of State not use the chance of the White Paper to introduce the mechanisms that the all-party Select Committee suggested to him, under which parents—who, after all, are not bad judges of the quality of teaching in their children's schools—would have a greater opportunity of bringing complaints to him and his inspectors? How does he reconcile paragraph 33 of the White Paper, which states that primary education teachers should have narrower specialisation, with paragraph 64, which states that they should have broader specialisation? Did the inspectorate write one half of the White Paper, while the right hon. Gentleman's officials wrote the earlier half?

Sir Keith Joseph: As the hon. Gentleman knows, parents are free to complain to the local education authorities and to the holder of my office. We envisage that primary teachers should have a broad training, since it is the practice that they teach whole classes in every subject as well as being expert in one subject in order to provide curriculum leadership in that subject within the school.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to call hon. Members to ask questions on the statement until 4 o'clock and then to move on. The number who are called will depend upon the length of questions.

Mr. Alan Haselhurst: Does my right hon. Friend include in the specific criteria to which he referred the need for teachers of teachers to have recent successful classroom experience?

Sir Keith Joseph: Certainly. That is emphasised both in the White Paper and may be so in the criteria that we expect to receive.

Mr. Nigel Spearing: Does the Secretary of State realise that many of the objectives that he mentioned in the White Paper will be welcomed by experienced classroom teachers, and that many of them think that they are 20 years too late? However, does he accept that the use of the word "dismissal" in respect of teachers who have been properly recruited and appointed under the existing system will not provide confidence and trust in his administration or in the way in which the objectives are to be attained, which should be there if our education system is to operate with confidence and in an atmosphere of consent?

Sir Keith Joseph: I am grateful for the hon. Gentleman's words of encouragement at the beginning of

his question. Surely he would agree that it would be amazing if in a gathering of 400,000 people some were not up to the job or had become not up to the job. It is for that small minority that, in the interests of the children, in the extreme case and after full efforts with in-service training, "dismissal" is the suitable term.

Sir Albert Costain: In the retraining process, will my right hon. Friend pay special regard to the need for modern languages such as Chinese and Japanese to be taught in schools, which industry finds useful, but it has difficulty in finding students who speak those languages fluently?

Sir Keith Joseph: I take my hon. Friend's point seriously, but it relates more to further education than to schools.

Mr. Alexander W. Lyon: After a casual glance I see no reference in the White Paper to multi-cultural training either in preliminary education for teachers or in in-service training. Is that not one of the most important needs in a multi-cultural society, where many of the most serious problems are in inner city schools?

Sir Keith Joseph: The emphasis is on the essentials of any education, which are a grasp of the English language, mathematics, science, modern languages and religious education as the central features in the curriculum.

Mr. Tim Rathbone: Does my right hon. Friend's excellent statement extend to, on the one hand, nursery teachers and, on the other, to teachers of business courses?

Sir Keith Joseph: Not specifically, as the emphasis is mainly on primary and secondary education. However, we are interested in the competence of the teachers to whom my hon. Friend refers and also those in special schools.

Mr. Tam Dalyell: In paragraph 87, rightly, emphasis is given to the implementatior of the Cockcroft committee report on the teaching of mathematics. With that priority, will the Secretary of State call for the papers setting out the circumstances in which the UGC fined the Heriot-Watt technological university in my constituency £20,000 for having too many engineering and mathematics students? Will the right hon. Gentleman call for those papers when it is convenient?

Sir Keith Joseph: No, Sir, because the UGC, under successive Governments, has been left to carry out its own decisions.

Mr. David Madel: Paragraphs 33 and 42 refer to retraining and the proper deployment of teachers to make sure that the curriculum is effective. If local education authorities meet paragraphs 33 and 42 properly and effectively, will a more relaxed attitude be taken to their overall education spending?

Sir Keith Joseph: I suspect that I am being asked to agree to something to which perhaps, after further thought, I should not want to agree. Perhaps I can write to my hon. Friend.

Mrs. Renee Short: As Britain now has the lowest percentage of post-compulsory education students compared with France, West Germany, Italy, Japan and even Ireland, and the lowest percentage of students in universities—only 0.5 per cent.—what effect will the right hon. Gentleman's announcement have on this pretty disastrous situation?

Sir Keith Joseph: I contradict each of the hon. Lady's assumptions. We have nothing like the lowest proportion of post-compulsory students in training in the western world. In fact, I should enjoy sending the hon. Lady a statement—or perhaps she will table a question that I can answer—pointing out that our proportions—[Interruption.] We may be talking about different things, but the hon. Lady's assumptions are not correct.

Sir Paul Hawkins: I congratulate my right hon. Friend on his statement, but I wish that it had been made three years earlier. Can head teachers who are totally inadequate and who allow low standards to exist in their schools, thus handicapping their pupils, be removed or retired? If so, will he make that clear to the local education authorities? I ask that because of complaints about a secondary modern school in my constituency, where for three years the head teacher allowed low standards of discipline and education that undoubtedly handicapped the children attending that school.

Sir Keith Joseph: There is no more magic way of transforming the quality of a school than by changing the head teacher in those rare cases where he or she is not up to the job. Local education authorities know that very well, and I urge them constantly to do it.

Several Hon. Members: rose—

Mr. Speaker: Order. After I have called the remaining three hon. Members who have risen I shall call the Opposition Front Bench spokesman to conclude questions on the statement.

Sir Anthony Meyer: Is my right hon. Friend aware that nowhere will his announcement be read with closer concern or keener interest than in Wales, where there is great worry about the standards of education in certain schools? Will he confirm that his announcement means that trainee teachers will have more opportunities for classroom practice?

Sir Keith Joseph: I can confirm that. My hon. Friend the Under-Secretary of State for Wales is sitting beside me, as my right hon. Friend the Secretary of State for Wales and I are associated with the White Paper.

Mr. Anthony Nelson: Does my right hon. Friend accept that there will be a widespread welcome for many of the proposals that he has announced for getting better teachers into schools? What more can be done to get bad teachers out of schools? Does he agree that one of the reasons for poor educational attainments and the wide variation in education standards is the entrenched security of employment for many existing teachers? Many people in initial training will look to some changes in that area if the improvements that my right hon. Friend has announced are to take full effect.

Sir Keith Joseph: It is up to the local education authorities to take action in respect of that very small minority of teachers who are letting down the children by not being up to the job.

Mr. Nigel Forman: I welcome the greater emphasis that my right hon. Friend is obviously determined to give to pedagogic skills in teacher training curricula. How quickly can we hope to see this switch of emphasis take effect? Does he agree that it must take place quickly?

Sir Keith Joseph: I hope that most teacher training institutions will begin to put the emphasis in the White Paper into effect when they have read it.

Mr. Donald Coleman: Is the right hon. Gentleman aware that at present there is considerable concern in Wales, where about 2,000 teachers are unemployed? His statement may well exacerbate that situation. Will the Secretary of State for Wales make a similar statement in the House on how these proposed changes will affect Wales, especially in the light of teaching in Wales through the medium of the Welsh language?

Sir Keith Joseph: I gather that there is to be no separate statement, because this is a joint White Paper.

Senator Kennedy (Senate Motion)

Rev. Ian Paisley: I beg to ask leave to move the Adjournment of the House under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the move in the American Senate by Senator Kennedy and his supporters to pressurise Her Majesty's Government to push Northern Ireland out of the United Kingdom into a United Ireland".
This matter is specific and important and deserves urgent consideration because, first, it is an example of arrogant interference in the internal affairs of this United Kingdom. Senator Kennedy and the United States Senate would be better employed seeking to resolve the many and grave difficulties faced by the United States, both domestic and international, than interfering in the affairs of this kingdom.
Secondly, this is an example of dangerous interference because it strikes at the citizenship of more than 1 million United Kingdom subjects and gives great encouragement to those who, by bullet and bomb, are seeking to destroy them. Nothing could help the IRA more than the resolution moved by Senator Kennedy. Senator Kennedy states that he is impatient with the British Government and the Unionists of Ulster because they will not capitulate immediately to an all-Ireland settlement. What right has he to talk about impatience, when the vast majority of people who have been slaughtered—

Mr. Speaker: Order. The hon. Gentleman must not make the speech that he would make if I granted his application. He must confine himself to justifying why we should have an emergency debate.

Rev. Ian Paisley: That, Mr. Speaker, is what I am trying to do by my second point. May I briefly say that the people of Northern Ireland are impatient of a man of the reputation of Senator Kennedy and the infamy of Martha's Vineyard—

Mr. Speaker: Order. That has nothing to do with the hon. Gentleman's application, and he must confine himself to the application.

Rev. Ian Paisley: I trust that I can bring my remarks to a conclusion by saying that I hope that the Senator will cast the beam out of his own eye before seeking to cast the mote out of Ulster's eye. When he does that, I hope that he will have a long period of eye treatment.

Mr. Speaker: The hon. Gentleman gave me notice before 12 o'clock midday that he would seek leave to move the Adjournment of the House under Standing Order No. 9 to discuss a specific and important matter that he believes should have urgent consideration, namely,
the move in the American Senate by Senator Kennedy and his supporters to pressurise Her Majesty's Government to push Northern Ireland out of the United Kingdom into a United Ireland".
As the House knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the order but to give no reasons for my decision. I listened carefully to the hon. Gentleman's represenations, but I must rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the Mines and Quarries (Valuation) Order 1983 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Archie Hamilton.]

Orders of the Day — WAYS AND MEANS

Order read for resuming debate on Question [15 March].

AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of

(a) any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax, otherwise than by a provision relating to supplies to, and importation by, a government department, within the meaning of section 19 of the Finance Act 1972;
(iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

(b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable, other than—

(i) an amendment providing for a different rate of surcharge to be paid by the bodies specified in section 143(4) of the Finance Act 1982; and
(ii) an amendment relating to the Commission to be established under the Act resulting from the National Heritage Bill [Lords].—[Sir Geoffrey Howe.]

Question again proposed.

Budget Resolutions and Economic Situation

[Relevant European Community Documents: Nos. 10337/82, Annual Economic Report 1982–83, together with the final version as adopted by the Council, and 10480/82, Annual Economic Review 1982–83, together with paragraph 7 of the Fourth Report from the Select Committee on European Legislation, House of Commons Paper No. 34-iv of Session 1982–83, and paragraph 4 of the Eleventh Report from the Committee, House of Commons Paper No. 34-xi of Session 1982–83.]

Mr. Speaker: I have selected the amendment in the name of the right hon. Member for Glasgow, Hillhead (Mr. Jenkins).

The Secretary of State for Industry (Mr. Patrick Jenkin): I begin by welcoming the right hon. Member for Leeds, South (Mr. Rees) to our debates in his role as overlord. I understand that he was elevated to this job so that he could keep an eye on his right hon. Friends the shadow Secretaries of State for Industry, for Employment, for Trade and for Energy. I imagine that his job is to shadow the shadows. Indeed, his role has been so shadowy that until today we have not had the pleasure of hearing him speak in an economic debate. Like the House of Lords in "Iolanthe", he does nothing in particular, but he does it very well. We welcome him here today.
The Labour party sometimes seems to be puzzled by its low—if the polls are anything to go by—and falling level

of popular support. The reason lies in its failure to understand why things have gone wrong with the British economy and what needs to be done to put it right.
The right hon. Member for Stepney and Poplar (Mr. Shore) summed up the Opposition's case again last Wednesday when he referred to "lack of demand" in the British economy as reported at c. 249 of the Official Report. In the Opposition's view, that is the main cause of the recession and of unemployment and the answer is to scatter money all over the country. I cannot remember whether the figure is £10 billion, £11 billion or £12 billion. I lose track of the right hon. Gentleman's various proposals.

Mr. Peter Shore: It is £10 billion.

Mr. Jenkin: I am grateful to the right hon. Gentleman. I believe that the figure was somewhat larger a few months ago. The right hon. Gentleman believes that our problems would then melt away, but when previous Governments tried scattering money around, what melted away was the pound in the consumer's pocket and our share of world trade.
My right hon. and learned Friend the Chancellor in his Budget statement gave the lie to the argument that there has been a chronic decline in demand. Domestic demand in Britain is growing in real terms by about 2·5 per cent. per year. The growth in demand is stronger than in most other industrial countries. The January demand for cars in this country was the highest January figure in our history. All too often, however, that demand has been met by imports rather than by home-produced goods. Why is that so? That is the critical question.
In the past, industrial production in Britain has been a nightmare obstacle race. Firms have had to try to reach the winning post across the obstacles of restricitive working practices, monopoly state-owned industries, monopoly unions, disincentives to enterprise and profits, anti-business taxation and failure to adapt and innovate. I could go on. The list is very long.
The Labour party should know about those obstacles, because it invented most of them. The Labour party was responsible for the massive nationalisation which has been an incubus round our necks. The Labour party gave sweeping obstructive powers to the trade unions and—according to this morning's press—intends to do so again. The Labour party has deliberately discouraged enterprise and constantly peddled propaganda denigrating profit. We should never forget, either, that each of the leaders of the Social Democratic party has backed everything that the Labour party has said and done.
The present Government have begun to put matters right, and this budget makes further progress. It is a Budget for enterprise, innovation and industry, and especially for the small and medium firm. Just as the jobs depend upon customers, so industrial recovery depends upon British firms being able to supply the customer with what he or she wants. The price of the product is crucial. One of the best ways in which we have helped industry is by bringing inflation down from more than 20 per cent. to about 5 per cent. Interest rates have fallen by more than 5·5 percentage points since the autumn of 1981, and each percentage point cut helps industry to the tune of £250 million per year.

Mr. Shore: The right hon. Gentleman is making some extravagant claims. Have not British interest rates simply followed American interest rates down and, indeed, remained higher than American interest rates, which are currently at least 2 per cent. below our own? What credit can the right hon. Gentleman claim for success in that area?

Mr. Jenkin: When the Labour Government faced economic crises, as we faced problems in September 1981, interest rates had to go up. The fact that my right hon and learned Friend has presided over a fall of over 5·5 percentage points in the interest rate is a measure of the strength of the economy.
There is also the help given by cutting the national insurance surcharge—the tax on jobs introduced by Labour, increased by Labour and supported by the Liberals and the SDP. Our cuts in that tax will help private business by about £2 billion in a full year. The right hon. Member for Salford, West (Mr. Orme) complained last Wednesday that the Budget offered no help to big business. It is interesting to hear the Labour party boosting the claims of big business, but in claiming that the Budget offered no help to large firms the right hon. Gentleman seemed to forget that last November's 1 per cent. cut in NIS takes effect this April. That is in addition to the 0·5 per cent. cut announced by my right hon. and learned Friend the Chancellor last week. That is an earnest of our intention to get rid of the tax altogether. When we came to office it was 3·5 per cent. It is now down to 1 per cent., and the value of that to private industry is about £2 billion.
Industry will also be able to seize the opportunities opened up by the more competitive exchange rate, but it must continue to curb production costs, including pay, if the benefit is not to be eroded. There are inevitable time lags before the full effect on trade flows is felt, but the benefits on cash flow and profit and loss accounts should be felt much sooner.
Lower oil prices will also generate a stimulus to industry through increased output and trade. It cannot be repeated too often that lower oil prices benefit our economy, just as rising oil prices damaged it. One way in which industry can reduce its energy costs is by conversion to coal. Even with the fall in dollar oil prices, many industrialists would find it cheaper to change from oil or gas to coal. I remind the House that the coal conversion scheme provides grants of up to 25 per cent. for conversion, and there are cheap ECSC loans to cover a further 50 per cent. of the cost. The grants and loans scheme was due to expire at the end of this month, but I have decided to extend it until the end of the year and any applications received before then will be eligible for grant.
During the debates on the Budget many hon. Members have rightly referred to the importance of developments in the world economy and the forthcoming summit at Williamsburg. My right hon. and learned Friend the Chancellor deserves more credit than he has so far received for the major part that he has played as chairman of the IMF interim committee. It was at his insistence that the meetings were accelerated and agreement reached to implement the replenishment decisions this year. In effect, that means a doubling of fund resources, with the increase available two years earlier than would otherwise have been the case.
My right hon. and learned Friend the Chancellor has also played a leading role in shaping the global economic

strategy adopted by the internatinal economic community. The initiative agreed at the Versailles summit last June on closer convergence of policy by the major countries whose currencies make up the SDRs was built on a proposal made by my right hon. and learned Friend at the 1981 annual fund meeting. Moreover, hon. Members will have read on the tape that my right hon. and learned Friend chaired the meeting in Brussels this morning which resulted in agreement on the realignment of the EMS currencies.
There is no doubt that the greater stability heralded by those moves will be of the utmost value to the increase of world trade.
Taken together, all those developments—lower inflation, lower interest rates, lower exchange rates. lower oil prices and greater stability—provide a substantial boost for industry. The right hon. Member for Salford. West rather missed the point in his speech last Wednesday when he analysed the problems of British industry in terms of markets lost due to lost capacity. In fact, it is loss of competitiveness that has lost markets. The motor car industry is perhaps the most conspicuous example, but there are many others. As a result, imports of manufactures have steadily risen. I believe that it is this perception of the home market being gradually eroded by imports that has galvanised many firms in the past two or three years to replace outdated plant with far more efficient capacity, such as I saw at BL Cowley, where the new Maestro car is being built. It is most impressive.

Mr. Nigel Spearing: It is publicly owned.

Mr. Jenkin: Yes, but it will be in the private sector eventually. There is no reason why that company should remain a burden on the taxpayer. It can fly with its own wings, as today's Financial Times suggests it should.

Mr. Spearing: Will the right hon. Gentleman give way?

Mr. Jenkin: No, I must press on.
Recovery depends upon Britain's greatest natural resource—people. It is people who start companies, who build them up, who win orders, who create wealth for the community and who provide jobs. It is the Government's job to provide a positive climate in which people can respond as I have outlined. I shall give examples of what my right hon. and learned Friend the Chancellor has done to that end in his Budget.
Last year we introduced the enterprise allowance scheme as an experiment for five areas, through which we made it easier for unemployed people to start up businesses by making an allowance of £40 a week available to them to offset their loss of unemployment benefit. The response was so encouraging that from 1 August to the end of March 1984 we are making the enterprise allowance available throughout the country—enterprise allowance goes nationwide.
Not only do people set up their own businesses, but many of them provide work for others. For example, an engineering firm in Scotland was set up by three people. They now employ three other skilled workers and an apprentice. In Kent a building trade wholesaler now employs two people, and in Coventry an insulation firm now employs seven people. Every successful venture under the enterprise allowance scheme means a job for someone. If one multiplies that 10,000 or 20,000 times, one can see that it is worth while.
There are also employee buy-outs. Many businesses which used to be parts of large groups of companies are being run more successfully now that they have been hived off into independent companies, as there is greater motivation among the employees. Businesses which might have been thought moribund have undergone a staggering revival. The Budget has helped such management or employee buy-outs, because interest payments on loans that have been taken out to buy the business will qualify for tax relief. One such example is W.H. Podmore of Wolverhampton in the heart of the west midlands. It is an electrical retailer and contractor and provides an excellent example of a management buy-out—it saved 30 jobs. My Department's small firm counsellors were happy to give advice.
Perhaps the most striking measure in the Budget and that which will have the biggest impact is the conversion of the modest business start-up scheme into the much more ambitious business expansion scheme. From 6 April the tax benefits of the original scheme will be extended to investment in most established unquoted companies. We are doubling the maximum—

Mr. Spearing: More public money.

Mr. Jenkin: The hon. Gentleman refuses to accept that this is tax relief to the investor who puts up equity capital, not public expenditure. We are doubling the maximum investment that qualifies for relief in any year from £20,000 to £40,000. That opens up new sources of equity capital for unquoted companies, which will help companies which have potential for growth to achieve growth and encourage local investors to back local firms, so helping the local economy. It is a major step in a direction that we must take to steer personal tax incentives much more towards individual investment in productive enterprises.
On Wednesday the right hon. Member for Stepney and Poplar gave a grudging welcome to our measures for small businesses. He said that he welcomed help for small firms "in principle". We welcome them in practice. The Budget is full of them. I am aware that many small firms depend on big firms for their business, but most big firms started as small ones. The Government have done far more than any previous Government to help small firms. Since we took office we have introduced more than 100 measures to help small firms, both established and new ones. One of the most important innovations has been the loan guarantee scheme, which the Budget continues. My hon. Friend the Under-Secretary of State gave details of that in a written answer last Wednesday. There is no doubt that the scheme is providing and maintaining thousands of jobs.
The Budget also helps small firms by raising the VAT registration threshold, by reducing the small companies rate of corporation tax, by there being a much lower marginal rate of tax between the upper and lower limits than that which we inherited and by widening the 100 per cent. tax relief on the conversion of old buildings to small workshops. One of the most encouraging things that I see when I go around the country is the number of new small businesses that have started up in convertedmills and other workshops which people can rent for modest fees with no long-term commitment.
Another of my aims has been to shift the emphasis of spending away from supporting the casualties of the past to backing the industries and products of the future. That, also, is now being achieved. At Question Time a week ago I told the House that support for British Leyland, the British Steel Corporation and British Shipbuilders, which was £1·75 billion in 1980–81, is forecast to be under £750 million in 1983–84. That is a major reduction.
During our term of office we have doubled Government support for new technology and innovation. This year's Budget provides £185 million over three years for that purpose, £100 million of which will be used to reopen the small engineering firms investment scheme—or SEFIS 2 as we shall call it. SEFIS 1 was launched last year to help small engineering firms to invest in advanced capital equipment.
I was astonished to hear the right hon. Member for Stepney and Poplar claim that the Labour party introduced SEFIS. Having virtually disowned the national insurance surcharge, which the Labour party certainly did introduce, he is now trying to claim the credit for SEFIS, which the Labour party most assuredly did not introduce.
SEFIS 1 was launched by my hon. Friend the Under-Secretary of State in March 1982. So great was the response from the engineering industry that we had to stop taking claims after just 8½ weeks, despite the fact that we added £10 million to the original £20 million that had been allocated. Under SEFIS 1, 1,400 firms have been made offers of assistance, £10 million has already been paid out to nearly 600 firms, and nearly 60 per cent. of the equipment orders will be produced in the United Kingdom.

Mr. Douglas Jay: Why, after all these wonderful schemes, are there still nearly 4 million people unemployed?

Mr. Jenkin: Perhaps the right hon. Gentleman can wait until I deal with bankruptcies. These measures are necessary to enhance competitiveness so that industry can win back customers and rebuild jobs. If the right hon. Gentleman, whom I greatly respect as a senior Member of the House, cannot see that, I am sorry for him. That is at the heart of what we are trying to do.
It is interesting to note that the west midlands gets about twice as much SEFIS support per head of population as the national average. By reopening the scheme and allocating no less that £100 million to it—four times as much as was allocated to SEFIS 1—we shall bring substantial help to the west midlands especially, as well as to small engineering firms in general.
There is no doubt that industry in the west midlands has suffered grievously in the recession. The reasons for that are deep and complex, the roots going back many years. West midlanders are rightly proud of their skills as metal bashers. They have an innate skill in handling metal to which industrialists in the area often refer. Of course there is a future for those industries, but many firms there need to modernise their plant, design new products and seek new markets. Moreover, the west midlands must broaden its industrial base.
It was disappointing to realise that relatively few firms in the region applied for the various forms of assistance under our support for innovation scheme. The reintroduction of SEFIS, and the additional help that the rest of my right hon. and learned Friend's innovation package makes


possible, enables me to anounce a new initiative to encourage more innovation in the west midlands. I am setting up a special team, to be called a team for innovation, in the west midlands regional office of the Department of Industry. Its purpose will be to help and to encourage firms in the west midlands to make the fullest use of all the national schemes of support for industry. The CBI in the west midlands is considering plans to coordinate and to promote industrial and commercial development in the region on a self-help basis. I hope that the CBI, the chambers of commerce and the local authorities will come together in a partnership to achieve this. I have asked my officials to give them as much help as they can.
I shall be ready to consider providing a modest grant-in-aid for the promotion of the region overseas, in coordination with the Invest in Britain Bureau in my Department. The CBI has called for firms in the region to make greater use of the Government's schemes, and I know that that organisation will wish to co-operate to the full with the innovation team. I am recruiting a senior industrial adviser to head the team and I am asking my hon. Friend the Under-Secretary of State—the hon. Member for Coventry, South-West (Mr. Butcher)—to take charge of this work. Under our support schemes for innovation in addition to SEFIS, a wide variety of help is available for the development and introduction of new technology, new processes and new products. That is what the west midlands needs, and by making a special effort to bring this to the attention of local businesses I hope that we shall see a much greater take-up of the schemes and, with it, a revival of the fortunes of manufacturing industry in the region.

Mr. Geoffrey Robinson: I apologise for missing the Secretary of State's introductory remarks. It would be churlish to denigrate his new initiative, but does he accept that it will be woefully inadequate to tackle the scale of the problem in the west midlands? Does he accept also that, with or without the innovation, unless the Government can come forward with a major purchasing programme that will affect the entire west midlands we shall see further bankruptcies, rising unemployment and a growing lack of competitiveness, which we cannot sustain against foreign competition that is becoming more intense?

Mr. Jenkin: I am grateful to the hon. Gentleman for welcoming the initiative. By far the best thing that could happen to the west midlands would be for British Leyland to get a larger share of the market and so expand its purchases of car and lorry components. It is now doing that and it needs all the support and encouragement that we can give. We shall have put nearly £1,900 million into British Leyland for that purpose.

Mrs. Jill Knight: Did my right hon. Friend notice the encouraging signs last week—without the enormous amount of Government support demanded by the Opposition—from companies such as GKN and Tube Investments?

Mr. Jenkin: Both companies are clearly feeling the effect of the world recession and both had to report lower profits. However, the chairmen of those companies gave encouraging accounts of how they had weathered the storm.

Mr. J. F. Pawsey: Will my right hon. Friend give way before he leaves the west midlands?

Mr. Jenkin: I am still talking about the west midlands.

Mr. Pawsey: In that case, I shall wait.

Mr. Jenkin: One problem in the west midlands is the lack of industrial premises. I am asking the English Industrial Estates Corporation to investigate the industrial property market and to establish whether it is meeting the needs of new industrial development, including high technology industry and new and small businesses. If necessary, I shall ask the corporation to undertake development in the region, although it is not an assisted area. I shall make separate financial provision to cover any work in the west midlands so that it does not affect the corporation's programmes elsewhere. All this is in line with our industrial strategy to encourage industries of the future, to encourage established industries to modernise and to encourage firms to adopt new technology.

Mr. Pawsey: Does my right hon. Friend accept that his package of measures will give encouragement to those who live in the west midlands? We appreciate, just as he does, that we need special measures. Those that my right hon. Friend has outlined will do much good and will be much appreciated.

Mr. Jenkin: I am grateful to my hon. Friend. I do not claim that they are more than a modest help, but they show what we have identified as the key issue in the west midlands—the need to modernise, to innovate and to seek new markets.

Mr. George Park: Will the Secretary of State give way?

Mr. Jenkin: I have given way a great deal to hon. Members on both sides of the House.

Mr. Park: Yes, but not to me.

Mr. Jenkin: Nor to many other right hon. and hon. Members.
Last year we regrouped the various schemes of support under the general title "Support for Innovation". It brought together all my Department's assistance for industrial research and development, for increasing awareness of the new technologies and for promoting their application. We raised the maximum grant level from 25 to 33⅓ per cent. and, with the help of the Budget, the rate will be kept at 33⅓ per cent. for a further year beyond May 1983. There is plenty of evidence that the increased rate attracted many more applications, which I hope will be sustained.
However, research and development alone are not enough. It is vital to exploit the results in the market, which is something that we as a nation have not always done well. I am extending the support for the innovation programme by an innovation-linked investment scheme, to which we are allocating about £40 million. Projects will be eligible for investment support under the scheme either when development work is being supported by the Department of Industry or if it would have been eligible for such support had the firm applied. This addition will help to fill a gap and will bring products out of the backroom and into the showroom. We are also giving extra help to promote computer-aided production management. There will be more support for the software products scheme and for the various advisory services to make


management, especially in small and medium-sized firms, more aware of the opportunities to improve design and manufacture.
I am convinced that design is crucial to commercial success. I am much encouraged by the way in which our new design advisory service, set up last year, has generated a demand from companies way above our expectations. The manufacturing advisory service has already provided benefits to more than 3,000 firms. We are currently considering a proposal from the Institute of Marketing to help to establish an advisory service on marketing to small and medium-sized firms. Making management more aware of the opportunities may represent a small, although a growing, part of my Department's budget, but the Department must become more people-oriented, because people create prosperity. That is why I am giving the scheme high priority. [Interruption.] I do not know why the right hon. Member for Leeds, South is laughing. When I say that to industrial audiences, they give it a very warm welcome because they recognise the need for those services, even if the right hon. Gentleman does not.
The industrial policies of successive Governments have been shaped more by the pressures of the past than by the opportunities of the future. We must redirect our industrial support to the products, processes, companies and industries of the future, because that is where prosperity and jobs will come. A most encouraging sign for the future is the enthusiasm and skill shown by our young people in new technology. We are top of the world league in providing microcomputers in schools. Thanks to our initiative, every secondary school has its own microcomputer and we intend to do the same for our 27,000 primary schools.
We must look to our universities and polytechnics. Unfortunately, the links between academic research establishments and industries are much less strong in the United Kingdom than in other countries, and there is a huge untapped potential for transferring technology from the laboratory to the market place. Therefore, I have set in hand a programme of consultation to determine how best to accelerate this process. My officials are already embarking on a series of consultations with 24 universities and polytechnics. I wish to see discussion with industry, research councils and other Government Departments. When this round of talks is completed, I shall bring forward further proposals for action.
The answer to Britain's industrial decline since the second world war is a more competitive, more enterprising and more innovating industry. We are clearing away obstacles. Step by step we are transferring state monopolies from the insulated public sector to the more competitive private sector. It was said:
What we lack in Government is entrepreneurial ability.
Those are not my words, but the words, spoken in 1974, of the right hon. Member for Bristol, South-East (Mr. Benn). For once, he was right.
Governments do not create wealth. That is done by people, partnerships, firms and companies. Governments can create the climate to provide the incentive and remove the obstacles. There are now real signs of improvement. Industrial production, housing starts, productivity, consumer spending and exports are all up, and last year when world trade in manufactures fell United Kingdom

exports of manufactures rose and we increased our share of world trade. I shall say that again. Last year, we increased our share of world trade in manufactures.
The Budget reinforces that success, not only by the many imaginative measures that the Chancellor has announced, but by substantial reductions in taxation. The Budget's measures are worth no less than £2·75 billion in a full year—a considerable boost in itself. In the many words spoken and written about the Budget since my right hon. and learned Friend sat down, the fact of that £2·75 billion boost has not been given the prominence that it deserves. This is an expansionary Budget, and, because of his careful financial management of earlier years, my right hon. and learned Friend has been able to combine in the Budget both prudence and incentive—prudence in sticking to a strategy that has brought our inflation rate from being one of the highest in Europe to one of the lowest, and incentive in that tax cuts and other measures will provide a substantial boost to the economy and, above all, to jobs. We are on the road to sustainable recovery, and for that reason the Budget deserves the support of the House and the country.

Mr. Merlyn Rees: I am grateful to the Secretary of State for Industry for his words of welcome. My job is to keep an eye on the Government, and it is as terrifying to watch economic affairs as it is to watch others. Although it is 20 years since, in a small way, I had responsiblity for economic affairs, they are no different from the other matters for which I have had greater responsibility. When I was shadow Home Secretary, the Government were going to deal with law and order, cut crime and deal with the problem of immigration. That was nonsense. When I look at the Government's policies on economic affairs, on jobs and on cutting taxes, the circumstances are the same. Whatever the Government touch goes wrong and whatever promises they made three or four years ago they have not carried out.
In retrospect, since last I was involved, I detect that the mystery or romance of the Budget has been taken away. Gone is the secrecy. [AN HON. MEMBER: "Gladstone retired."] That may be so. In that case, he retired fairly recently. Gone is the special unit that worked in the Treasury behind locked doors with access only by passes. In the Franks committee of 1972—and this shows how things have changed—we recommended, on the basis of the advice and evidence given to us, that part of the Budget should at least be protected by the criminal law. If that had been the case, half of Fleet street would now be in gaol, because for weeks what was to happen in the Budget had been discussed and orchestrated at both City and press lunches.
I have been reading myself into this job in the past few months and I feel that it would be better if, when the Treasury and Civil Service Select Committee looks at public expenditure in the autumn, it also looks at the Government Budget proposals in advance of their being put to the House in the formal way. We could have earlier debates, and the long debates on the Budget, which occurs after the event and which is a little like déjà vu, could be shorter and more to the point.
There is also the problem of timing. What did the Chancellor have in mind when he said that he might come back to the House? Is he suggesting that later in the year


there will be another Budget? I assume, and I am probably right, that this is because of the fall in oil prices, which will affect the PSBR, the balance of payments and the exchange rate.
However, what is the Government's policy on oil prices? Today, the Secretary of State for Industry said that he welcomed the fall in oil prices. Is it Government policy for BNOC not to co-operate with OPEC so that we can have a steady fall in oil prices? All that we have been reading in recent weeks about the Secretary of State for Energy and his discussions with OPEC Ministers in London adds up to little if that is so.
In terms of the Budget overall, however, the misuse of our oil revenues in recent years to finance unemployment is one of the greatest scandals of the Government's policies. I agree with the right hon. Member for Chesham and Amersham (Sir I. Gilmour) who said in the debate last week that without oil the Government could not have relied on what he called the medium-term financial strategy. We have had large oil revenues only in the past two or three years, and they have been wasted.
Our overall indictment of the Budget is that it contains no strategy to return to full employment. The Government show lack of concern for the unemployed and the 500,000 young people who have never been employed. We are glad that schools have computers and that we lead the way on computerisation in the way described by the Secretary of State for Industry. Does he know about 500,000 young unemployed who have never worked and who have no chance of working? We have many people like that in our constituencies.
I am surprised that, compared to the inter-war period, there has been no rumbling of discontent. What hurts me most is that there is no rumbling of discontent from those in work about the position of these young people. Nothing said in the Budget enables me to go back to my constituency and tell the large number of unemployed young people who have no chance of getting a job that there is something in the Budget that, at least in the course of time, will give them a job. If I said so, I should be telling an untruth.
The Budget is like those pre-war Budgets of Neville Chamberlain before he achieved fame in international affairs. He told my generation when it was in its teens that unemployment was inevitable and that nothing could be done. We have no doubt that unemployment is man-made and can be ended.

Mr. Patrick Jenkin: Will the right hon. Gentleman explain why, during the six years that he was a Minister, unemployment doubled?

Mr. Rees: I am happy to do that, but more people were working at the end of our period in office than when we came into power. It is all very well to talk about doubling unemployment to 1 million plus, but we are talking now about 4 million unemployed. If there is any way that I could go to the unemployed in my constituency and honestly tell them that they will be getting a job before the end of the year I should be prepared to do so. However, there is no point in adding to the gloom of such young people just to secure a political advantage.
The Secretary of State and the Government should be grateful to the unemployed. According to the Conservative manifesto at the last election the Government would not be having an incomes policy. The Government have an

incomes policy, however, and it is represented by 4 million unemployed. The unemployed are not consumers to the extent that they would be if they had jobs. The reason for the fall in inflation is not some clever abracadabra of economic policy. It is due to the 4 million unemployed. What sort of society are we living in when the Government still have to use, as in the inter-war years, a large number of unemployed to bring down inflation?
There is a basic division between the two sides of the House on unemployment and the policy to deal with it. I am again reminded of the 1920s and the 1930s. The first Budget that was designed to use all the manpower and womanpower in this country was that of 1941. It was completely unlike all previous Budgets since the Lloyd George Budgets of the first world war. To enable us to win a war, we had to use all the manpower in the country. [AN HON. MEMBER: "What about national service?"] National service was relevant then. It is not now.
In 1944, Ernest Bevin, on behalf of the three major parties, introduced a White Paper on "Full Employment". He made a speech on 21 July 1944, shortly after the D-Day landings, which were on everyone's mind. Like everyone in the House, Ernest Bevin, who was Minister of Labour—not Secretary of State for Employment—was concerned about what was happening 100 miles away. He moved a motion that
welcomes the declaration of His Majesty's Government accepting as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war,"—[Official Report, 21 June 1944; Vol. 401, c. 211.]
Ernest Bevin told the House that he was stating this on behalf of the coalition Government. He gave a history of what had happened in his public life explaining that social services had come into being at the turn of the century to alleviate the problem of unemployment. However, that was not enough. It was after the event. What had to be done, irrespective of party and with widespread agreement, was to face the fundamental problems of maintaining full employment in a free society. It is moving to read his words when he stated, in relation to full employment,
We are, indeed, grappling with the problem which is uppermost in the minds of those who are defending the country to-day, at home, overseas, and in those bitter fights across the Channel. With my right hon. Friend the Prime Minister, I had an opportunity of visiting one of our ports and seeing the men, of the 50th Division"—
he was referring to the 50th Northumbrian Division—
among others, going aboard ship—gallant men, brave men with no complaint. They were going off to face this terrific battle, with great hearts and great courage. The one question they put to me when I went through their ranks was, 'Ernie, when we have done this job for you, are we going back to the dole?"'
Ernest Bevin's reply, as he told the House, was
Both the Prime Minister and I answered, 'No, you are not.' That answer of 'No' to those brave men, going aboard those ships to fight, was an answer which, I hope, will be supported by the House, and I hope that policy will be directed towards making that answer a fact, not only for them but for future generations."—[Official Report, 21 June 1944; Vol. 401, c. 212–13.]
I wonder what the Prime Minister and Secretary of State for Employment today would say now in such circumstances. I wonder what the Secretary of State for Employment would have said to those men. That is a measure of the change that has taken place. I am not suggesting that there are easy solutions to the problem. I am suggesting, however, that a Government retreat from those problems and a failure to declare that their aim is the


maintenance of full employment show that something is wrong. A modern society should not tolerate 4 million unemployed.
The Budget does not provide the means to expand the economy. It does not provide the thrust to motivate Government Departments to concentrate on the problem. It would be foolish to try to suggest easy solutions. We are not talking about full employment in the context of 1944. There have been advances in technology. It is our case, however, that full employment should be the keystone of the arch of Government policy. The Secretary of State for Industry forgets that the economic situation today is different from what it was five years ago in terms of boom and slump. We are at the bottom of a slump. It is necessary to increase the PSBR. Our fiscal policy is the tightest in the western world. We should be spending money on the construction industry, sewers, education and housing. My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) has spelt out the action that needs to be taken.
I notice that the hon. Member for Horsham and Crawley (Mr. Hordern) has raised again the absurdity that the Treasury still follows, as it did during the time of the Labour Government. It fails to make a distinction between capital investment and borrowing for current expenditure. If that distinction had been made, we would have been spared half the nonsense that has occurred over privatisation. It was getting the PSBR right and not so much for reasons of ideology, although it happened to coincide, that motivated the Treasury.
It is not a matter of chucking money at the problem. At the bottom of a slump, compensatory spending makes good sense. Our aim is to reduce unemployment, provide new jobs, more jobs in new industry and to stop the de-industrialisation of Britain.
De-industrialisation should be considered by hon. Members as unemployment was in 1944 when party differences were not allowed to interfere with the obvious needs of full employment. I commend to the House an article by Professor Thirlwall of the University of Kent in a recent issue of Lloyds Bank Review in which he points out that statistically, although there are problems of definition, the de-industrialisation of Britain is not new, that it has been going on for 20 years or more, but that its growth has been far greater recently and, according to figures that I have examined, ours is the greatest in the western world. We have to ask ourselves why this has happened. According to the views of economists, there are three reasons for de-industrialisation. The first is Government spending. That is the conclusion that the Government have drawn. The second is technological change and the third the effects of foreign trade. His conclusion was that it was caused not by Government spending or by technological change—which, on the whole, provides jobs—but that it arose mainly from foreign trade. That is the aspect that we should be examining.

Mr. Tim Eggar: Was not the whole point behind the paper to which the right hon. Gentleman refers an argument for expansion and increase in foreign trade? How does the right hon. Gentleman feel that this thrust coincides with the Labour party's commitment to import controls?

Mr. Rees: Our view is to say "No" to general import controls, but "Yes" to selective controls. To have selective import controls and then to do nothing in the context of planning would mean failure. The reason that I may have found the article by Professor Thirlwall so engaging is that many years ago I taught him economics.

Mr. Michael Morris: The right hon. Gentleman did?

Mr. Rees: I did, yes. It is not the explanation for his view. People can go a long way in their careers afterwards.
De-industrialisation is the other side of the coin.
The Government have intervened and are not leaving things completely to free market forces. The Secretary of State is preening himself on what he has done with the small engineering firms investment scheme, SEFIS 1 and 2—SEFIS and son of SEFIS. The House has heard them all today. In this respect I wondered why the Secretary of State was concerned about the west midlands. There has not been a great deal of concern about the west midlands before. However, I imagine there are other reasons for it that I know not of.
British Leyland is not a nationalised industry. It is a publicly owned industry that fell into the Government's lap because it went bust. That was the position with Rolls-Royce. Hon. Members should look at the publicly owned, as opposed to the nationalised industries, in a different way. It all began with Rolls-Royce in the days of the right hon. Member for Sidcup (Mr. Heath). The Secretary of Stat for Industry took my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) to task because he had not been very forthcoming about the proposals that had been put forward by the Chancellor and the Secretary of State.
In yesterday's edition of The Observer an interview with the Secretary of State for Industry was very revealing. It was like Peg's Paper. It said that the Secretary of State
is not the sort of man who throws things at his television set, but he was apparently tempted on Tuesday … The object of his rage was a small businessman whose verdict on the Budget was: 'There's nothing in it for me'.
My right hon. Friend the Member for Stepney and Poplar is in good company—only one so far.

Mr. Patrick Jenkin: rose—

Mr. Rees: May I finish? Then, of course, I shall give way. The interview continued:
'He says that without even bothering to look,' explodes the Minister, displaying a martyred expression of those who are not understood.
Then he has a go at the Engineering Employers Federation. It got even rougher treatment:
'They have been banging and banging away at us because we had to stop the small engineering firms investment scheme (SEFIS). Then they say there's nothing in this Budget for our industries, and here we are with 100 million over the next three years to revive SEFIS and I don't think they've even noticed. It's so damned unfair.'
He continued in that way. I do not decry what he has done, but it is puff-ball compared with the real needs of the economy.

Mr. Patrick Jenkin: My indignation was directed towards a lady who is a small business person. She is a member of the CBI's small businesses committee, whose chairman, Mr. Jeremy Pope, said with some exultation after the Chancellor of the Exchequer's Budget that he had given them almost everything they had asked for.

Mr. Rees: It is not for me to criticise people in small businesses, but the lady obviously felt like that. It is interesting how the article finishes:
However much the Secretary of State argues, no figures are given about the number of jobs that are provided by this scheme because they do not know".
The Government have intervened in a small way. Our policy is to develop that intervention in a bigger way. There are plans to deal with the national crisis. There must be partnership between the employers, the Government and the trade unions. It is no good the Labour party's saying that the employers in the private sector are somehow an enemy because they are in the private sector. Similarly, the Government should not take that attitude with the trade unions. Unless the trade unions are brought into partnership to discuss matters, the economy will not come right. There is no panacea or blueprint. Until we talk together in this country, we shall not achieve in peacetime the unity that was achieved in wartime. However, it can be done. That is why we should spell out our policy. I ask—I have not consulted on this, although it seems to be a good idea—that just as the public expenditure proposals were discussed by the Treasury and Civil Service Select Committee the Labour party's proposals that have been spelt out should be looked at by such a committee. There is nothing to lose. If mistakes are made it is better to iron them out and have them discussed before proposals are implemented. If the Government proposals on immigration had been looked at before 1979 by anybody who knew anything about the subject, they would have proved them to be wrong because they were rubbish.
I play a part in working out the Labour party's general policy, and hon. Members ought to discuss it before the election just as we discuss the Government's policy.
The Department of Industry should have wider responsibilities, with the forecasting part of the Treasury brought within it. Forecasting is important for discussing what is happening with individual firms and industries. A national investment bank, which has been on the agenda for 30 or 40 years, should be set up to provide resources direct to industry rather than to portfolio investments. Finally, there should be tripartite discussions between the three sides of industry to examine growth, employment and real income. By partnership and discussion, and by looking at the wider aspect of employment, incomes of all sorts can be examined. It is not sufficient just to look at pay and incomes by themselves. The right way is to examine the position collectively where everybody plays a part in coming to a decision.
The press said that the Budget was boring. We can all bear what the press says on these matters. We in the Opposition regard it as irrelevant to the main aim of stopping de-industrialisation and returning to full employment. We do not need to look for our salvation to eastern Europe with its bureaucracy, or to Reaganomic United States with its free market forces. Britain needs to do something in the international economic scene, and this will be dealt with later. At home we can be our own economic schoolmasters, as we were in 1944, but we must relearn the lesson of the 1944 White Paper and update it to meet today's problems. The Government must lead in the fight to deal with unemployment. The Government's policy palpably does not deal with unemployment, the fall in industrial production and the large number of bankruptcies. This Budget is irrelevant to the needs of the community.

Mr. Roy Jenkins: I beg to move, as an amendment to the proposed motion, in line 5, leave out paragraph (a).
I shall deal briefly with the amendment before turning to the wider issues in the Budget. Its purpose is to delete the entire paragraph dealing with VAT. It is not that the Social Democratic party does not want any VAT. Indeed we proposed a lower rate of VAT, which would have been a useful counter-inflationary and stimulating measure in the present circumstances. As the paragraph stands—it is a narrow point—it would not allow the House to discuss any specific changes to VAT when considering the Finance Bill. Amendments could be put on the general rate but not on questions such as zero rating. The Social Democratic party regards this as of considerable importance.
Charities should be debated and more strenuous efforts should be made to find relief for charities, which could be done.
The major question here is the zero rating of building repairs and maintenance. It is increasingly ludicruous that there should be zero rating on new constructions and the full VAT rate on maintenance and house renovation. That does not make sense, on economic, amenity, housing or conservation grounds. There is much unemployment in the construction industry and a great deal of the repair business is done by smaller firms which the Government say they want to encourage. The Social Democratic party wants to press this issue very hard in the present circumstances. Without the amendment it will not be possible for the House to debate this and other important matters relating to VAT when we come to consider the Finance Bill.
The Budget disappears from the centre of political attention—I do not direct my criticism especially at this year's Budget—more quickly than used to be the case. We are debating the Budget six days after the Chancellor of the Exchequer announced it and when it is receding into There are two reasons for that. The first was mentioned by the right hon. Member for Leeds, South (Mr. Rees) in a slightly different way, and it is that it is now possible to read much of the Budget in the Sunday newspapers two days in advance, and whatever the Budget may say it inevitably comes as an anticlimax. I do not say that it is necessarily wrong to have more advance information about the Budget. Indeed, there was a great deal of mumbo jumbo about Budget secrecy and I do not want to take a rigid traditionalist position. However, any previous announcements should probably be made to the House instead of being leaked to the Sunday newspapers, partly by the Treasury but particularly, I suspect, by No. 10, Downing street. To cite the famous words of the editor of one Sunday newspaper, if there is a change of policy. we ought to be told. Has there been a change of policy about secrecy?

The Chancellor of the Exchequer (Sir Geoffrey Howe): Perhaps I might draw the right hon. Gentleman's attention to an article in the Financial Times on Friday, which reminded the House of the very important and deliberate changes that I have been making in response to the Select Committee's representations to publish much more information, notably in the autumn statement. I think that the right hon. Gentleman will find that all the forecasts, calculations and speculations could have been derived from that.
I have taken some interest in this issue, and although the variety of speculation was infinite, none of the forecasts was correct. That is confirmed by the article in the Financial Times. There has been no change of policy on leaking, but there has been a significant change of policy in laying as much information before the House as possible, in response to its representations.

Mr. Jenkins: I am sure that the Chancellor wishes to inform the House properly, but I am not sure that I find his argument wholly convincing. Of course the options are clearer than they used to be, because of the information given in the autumn, but I am sure that the right hon. and learned Gentleman and the House know that speculation in the Sunday newspapers went far beyond outlining the options. With the exception of one little mistake, which may have been due to a last-minute change after discussion between Downing street and the Treasury, or it may have been a deliberate error in order not to make the degree of leak too great, the Budget's general line appeared in the newspapers. That one little mistake was thinking that the ceiling for mortgage relief would be raised to £35,000 rather than £30,000.
It is not a question of options. The amount of information might be right or wrong, but it is no good the Chancellor of the Exchequer saying that there has been no change of policy about Budget secrecy. Indeed, while we are about it, we should give the late Hugh Dalton a posthumous part in this, because he resigned over the most minor indiscretion, and if anything like the same standards applied today the Chancellor of the Exchequer, the Prime Minister and all the Treasury Bench would be out of office.
The second reason why the Budget recedes so quickly from the centre of public attention is that a decade of high inflation has deadened the public mind to traditional budgetary changes. There are other factors, and other changes in incomes and prices, that make far more difference during the course of the year than 3p up or 2p down. Therefore, the traditional budgetary changes have become increasingly like toy sailing ships that are engulfed by the waves of much greater movements in the economy during the year. Of course, budgetary strategy can affect those waves, and it is the Chancellor of the Exchequer's strategy, rather than its execution, that is at fault. That strategy is mistaken, but in its own terms the Budget is reasonably consistent and creditable.
I am sure that the Chancellor will come bitterly to regret his treatment of pensioners. His disguised clawback will give him the worst of both worlds. The fact that he thought it worth doing clearly underlines the extent to which the Government's only economic achievement—the reduction in the inflation rate—is about to reverse itself in the second half of this year. For the rest, the Government's record is appalling. The right hon. Member for Stepney and Poplar (Mr. Shore) put that point with great force at the beginning of his speech last Wednesday. I do not agree with all his remedies, but his destructive analysis of this Government's record was put very succinctly.
Unemployment has increased from 1·3 million to 3·4 million. Industrial production has fallen by 12 per cent., while gross domestic product has fallen by 5 per cent. All that has happened while North sea oil revenues have increased from £5 billion to £14 billion during the

Conservative party's period of office. This Government would be totally bankrupt without North sea oil revenues. I cannot believe that it does not give the Chancellor of the Exchequer cause for concern that when North sea oil revenues are pretty well in full spate he is spending more on keeping people unemployed than he is receiving in total revenue from that oil. That is an extremely sobering fact.
Given those facts, the idea that some sort of moral regeneration is taking place in the economy is profoundly irrational and distasteful. There are fields of human endeavour in which, according to one's beliefs, one can think that purification of the spirit can be achieved by mortification of the flesh, but the management of the economy is certainly not one of them. Management of the economy is essentially a material process to achieve material aims by material means and must be judged in terms of the wealth and welfare that it succeeds in creating. On that test, the Government's record is appalling. The' Government have elevated the public sector borrowing requirement and it has now become a new fetish. In the Government's first few years sterling M3 was their fetish, but in the past two years the PSBR has replaced it. In the memorable words of the right hon. Member for Chesham and Amersham (Sir I. Gilmour), sterling M3 proved to be the uncontrollable in pursuit of the indefinable—or perhaps it was the other way round. It is equally good either way, but when that clearly became the case the Government switched to the PSBR.
I do not take the view that monetary aggregates and the relationship of public expenditure to public revenue are unimportant. Indeed, I am hardly likely to do so, because my record on public borrowing is much stricter than that of the Chancellor of the Exchequer. However, that was achieved in very different circumstances, when unemployment was less than 600,000. It was right in those circumstances, but it is not right in the present circumstances. To use the PSBR as almost the sole measurement for controlling the economy is ridiculous.
The Chancellor is hoisted, to some extent, by his own petard, because he has been forced in the Budget to do some pretty doubtful footwork with the contingency reserve to pretend that he is keeping to £8 billion or 2·75 per cent. of gross domestic product. However, surely the real as opposed to the symbolic impact of the PSBR on interest rates and inflation should be seen in terms of its total impact on the public debt. The real problem in relation to interest rates is how much Government paper one can get the non-bank public to hold voluntarily at a given rate of interest so that the banks do not have to take it, thereby creating money.
I was not aware until recently—I do not know how aware hon. Members are—that the real volume of public debt in relation to the national income has declined dramatically over the past two decades. When 13 years of Conservative rule came to an end in 1964, they handed over to the new Government of the right hon. Member for Huyton (Sir H. Wilson) a volume of public debt that was 85 per cent. of the national income. The relationship of public debt to the national income fell to 42 per cent. by the early or mid-1970s. Since then it has increased a little, but it is still under 50 per cent. I cannot see how, in those circumstances, it can be argued that the real volume of the national debt is the major determinant of inflation.
Although the Conservative Government after 13 years handed over to the incoming Government that heavy burden of debt, which has been greatly reduced, they also


handed over a rate of inflation which was rising slightly but which was much lower than anything that we have known recently.

Mr. Eggar: Surely the right hon. Gentleman has forgotten to point out that the rate of inflation, which started increasing in the late 1960s and continued into the mid-1970s, was a major factor which led to the change in the ratio and meant that the poor investor and the lender to the Government were the people who were left out.

Mr. Jenkins: I am not sure that the facts bear out the hon. Gentleman's case. I have the figures for the period here, but I do not want to quote them all. If one looks at the movement from year to year, one finds that, even taking into account the fact that things take their time to work through, it is impossible to see the decline in the relationship between national debt and national income from 85·3 per cent. to 42·9 per cent. in 1975 having any relationship with the rate of inflation.
I do not wish to argue that we should be indifferent to the size of the national debt or to public sector borrowing. That would be ludicrous. I pursued a stringent policy on that in particular circumstances. However, too much of a fetish as been made of the PSBR, and in the interests of himself and the country the Chancellor would be wise to step back and take a rather wider view.
There is a difference between Britain's position and that of the United States. The United States has a greater problem than we have, because it undoubtedly has a structural long-term, or, as it is sometimes called, full employment deficit. We do not. In other words, if one makes the adjustment in public finances if full employment were to return, we should be in surplus and not in deficit. Therefore, the Chancellor has locked himself into a false strategy, and as long as he so proceeds there will he no fall in unemployment and no escape from the increasingly divided nation that unemployment brings about.
The Chancellor told us that last year's Budget was a Budget for growth. There was little growth except in unemployment, which increased by 250,000. He told us that this year's Budget is one for the family, for enterprise and for Britain's continuing recovery. I should like to see Britain's recovery begin. I do not know what will happen to the family, but I do not think that enterprise will achieve a great deal. There will be some growth, but nothing created by the Budget and nothing that will reduce unemployment.
On the whole the London Business School is much more favourable to the Chancellor than most such independent bodies. It said that, of the increase in unemployment and the slump since May 1979, about half is attributable to the restrictive policies of the Government and about half to international circumstances. I agree with that. It would be ludicrous to blame the Government for the whole of the increase in unemployment, but it is reasonable to blame them for a significant part of it, particularly that part which has taken us well above the average for other major industrial countries.
By the same token it would be possible to correct half the damage for which the Government have been responsible by a sensible, well-directed change of budgetary strategy. The other half will to a large extent depend on international circumstances. It is vital that we take as constructive a role here as we possibly can. There

is a real opportunity to achieve greater currency stability, not just on a European basis, but on a world basis. Nobody should be mocking about that. We cannot put Bretton Woods on its throne again. The Bretton Woods world with fixed exchange rates was an immensely better world for traders and exporters, for production, growth and employment, than anything we have known since.
I was immensely depressed a short while ago to hear the Chancellor's reply when the right hon. and learned Member for Hexham (Mr. Rippon) asked him for his response to the United States Secretary of the Treasury's tentative suggestion for a new conference to look at current stability. The Chancellor said that Mr. Regan's ideas should not to be taken too literally.
The right hon. Member for Leeds, South was in a historical mood this afternoon in his interesting and powerful speech. Perhaps I may be allowed a historical comparison for that reply. Thirty-five years ago General Marshall went to Harvard and tentatively remarked that the United States should assist the European recovery. Twenty-four hours later Ernest Bevin mobilised the European nations and swept tentativeness into reality. The result was to give Europe—the recipient—and America—the donor—25 years of the greatest surge of prosperity that we have ever seen in world history.
A side result of that was the forging of the Atlantic partnership and a generation of peace and freedom in the west. It is horrifying to think what might have happened if the Chancellor had been in Ernest Bevin's place: if he had bumbled down to the House of Commons and said that General Marshall's words were not to be taken too literally. Had that happened, the history of the past 35 years might have been completely different. Europe might not have recovered. Freedom might have been destroyed and peace might not have been preserved.
I am glad that the Chancellor is presiding competently, as I am sure he is, over the interim committee of the IMF. However, I still do not think that there is sufficient world leadership coming from the Government at present. There is an opportunity for that, and that is what we should see happen today.

Mr. Edward Heath: In his Budget speech my right hon. and learned Friend the Chancellor of the Exchequer dealt with the international situation, as indeed did the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). Before I deal with that, I want to congratulate my right hon. and learned Friend on his constructive measures. They will all be helpful. In particular, I agree that there should be increased allowances instead of a reduction in the upper levels of taxation. My one reservation is about the retirement pension, to which the right hon. Member for Hillhead referred. That has become an infinitely contentious issue. It is not understood by the public. There is great confusion about whether there is clawback or no clawback. I cannot believe that that is for the good either of Government Members or of the country as a whole.
I ask myself why the change was made by a Labour Government to a system of forecasting what retirement benefit would be paid in the November when it was due. The reason was simply that every time it was fixed in May the pensioners said, "Why can't we have that amount now because we do not know whether it will be worth more or less by the time we get it?" That is a natural human


reaction. If one could now say to pensioners consistently, "Of course, inflation will be down by the time you get it," we might not be able to convince them at once, but it would at least be a rational position.
The Chancellor is not in a position to say that, as he has frankly admitted to the House. Therefore, retirement pensioners will be critical because they are unsure of the value of their pension by the time that they receive it. The answer to them is, "Yes, but if it is inadequate, account will be taken of that in the succeeding year." The human element enters again. I am afraid that pensioners do not think in terms of what they will receive in a subsequent year or years. That is human nature. When one has reached pensionable age, one thinks of the year in which one is living. One may hope to go on, but one wants the resources to carry on in the present year. It may be too much to ask my right hon. and learned Friend not to implement his proposal this year and thereby involve us all in numerous acrimonious discussions at the hustings, but I hope that he will recognise the human and natural difficulties.

Mr. George Cunningham: I should like to jog the right hon. Gentleman's memory. The real reason why the change was made by Mrs. Barbara Castle was exactly the reason why the Chancellor is proposing the opposite change now. At that time the change saved money, just as this change will. Two people have made changes in opposite directions for the simple purpose of reducing expenditure at the expense of the recipients of the benefit.

Mr. Heath: I was not responsible for Mrs. Castle. I was responsible for many things, but fortunately not for her. I do not know what was in her mind. I am recalling all the difficulties that we had over many years and the criticism by pensioners for fixing the amount in May which made them ask what it would be worth in November and why they could not have it immediately. The system has never been understood by people drawing their pensions. That is why I emphasise the human element.
The aspects discussed by my right hon. Friend the Secretary of State for Industry will be helpful. He was right to emphasise that his was a modest contribution but my right hon. Friend should not be too modest in these matters. For a Government who believe that the market solves everything automatically and therefore that the Government should opt out of everything, the recital of my right hon. Friend's measures of special incentives here, tax reductions there, special subsidies elsewhere, and, above all, advice for everybody, is a remarkable achievement. I hope that my right hon. Friend will not underestimate that aspect of his work.
We are talking in terms of £2.5 billion, but we often tend in our mental activities to act in terms of a former currency that existed when my right hon. Friend the Secretary of State for Industry was at the Treasury. I am sure that my right hon. Friend, in his opening condemnation of the measures taken in past decades, would not include those measures taken when he was at the Treasury. The £2·5 billion would have been less than £1 billion when my right hon. Friend was at the Treasury—perhaps only £850 million or £900 million. That is a comparatively small sum, and that is why my right hon. Friend is right to emphasise its modest nature and the impact that it will have on the economy.
The governing fact must be that it is right to encourage small businesses, but they cannot make up for the large employment by the great concerns which have got rid of so many employees in the past few years. We must face that, and I shall deal with that when I talk about the international situation.
I thank my right hon. and learned Friend the Chancellor because he has removed many of the anxieties that some of us have had in the past two or three years. I am sorry about the pensioners. If he is able to do something about pensions, many people will be grateful and it will certainly save us a great deal of political embarrassment. I hope that I am entitled to say that.
The oil issue is immensely complicated and not generally understood by the public. My right hon. and learned Friend rightly said that he could not foretell exactly what will happen and that perhaps later in the year he will have to make allowance for that. He specifically mentioned increasing the public sector borrowing requirement. I believe that to be justifiable in such circumstances.
One or two points in connection with oil remain to be cleared up before one makes a general statement. Is it right that my right hon. Friend the Secretary of State for Energy has given an undertaking to OPEC about the total production of North sea oil? Has he agreed that it should be limited to 103 million tonnes instead of the 113 million tonnes on which the Budget is based? If he has, it is bound to have a considerable impact on the Chancellor's calculations. How will the Secretary of State limit the output of North sea oil to the figure agreed with OPEC? I am not saying that limitation is undesirable, but if there is a difference of 10 million tonnes it will have an impact on the Chancellor's figures.
I believe that it is desirable that we should not stand aside, but that we should make every effort to influence OPEC in its decisions. There will be no reason for us to rejoice if OPEC fails to keep its agreement and we enter into a price war. Ir. the long term, stability is what is basically required over what is still the major energy material. If there is anything that we, governing North sea oil, can do to encourage immediate and long-term stability, we should do it.
Our relations With some OPEC contries, particularly Saudi Arabia, have not been good, to say the least. If we incur bad relations with OPEC now, we cannot expect it to take any notice of us if and when there is a world recovery, the demand for oil rapidly increases and OPEC wishes to push up the price far beyond what it is now. I strongly urge the Government to do everything possible to work with and influence OPEC in its decisions on production and price levels.
I am particularly worried about Nigeria, another country which produces oil similar to ours. Nigeria believes that we are leading a cut-price war against it. The Nigerians thought that at the time of the first reduction in North sea oil prices, and they believe it again now. Nigeria is our major trading partner in Africa. Our trade with Nigeria is greater than that with South Africa. Therefore, an enormous amount is at stake in our relationship with Nigeria. We should go out of our way to make it clear that we do not wish to engage in a price war with Nigeria.
I hope that the Chancellor will have a word with British Petroleum about its statements and their timing. Although the British Government no longer have a controlling interest in British Petroleum, they have almost a


controlling interest. The Government should talk to British Petroleum about its interventions and their timing and what it says. It has not been helpful in the past.
My concluding topic is the international position. My right hon. Friend the Secretary of State for Industry said that my right hon. and learned Friend the Chancellor of the Exchequer had not had the credit to which he was due. I gladly give him all the credit for what he has been doing since he has been chairman of the Committee of Twenty. The fact that he achieved a considerable increase in the general agreement to borrow is to his credit.
As my right hon. Friend the Secretary of State for Industry said, my right hon. and learned Friend has been immensely influential in the settlement reached at Brussels. This raises the question whether Britain should be a full member of the European monetary system, in which we take such a close interest and have such influence. We would then have our own currency backed by the resources of the Community. It was argued at one stage that the rate had to be right before we joined the EMS. We have moved from $1·55 to $2·42 and down to $1·48. Is there no rate within that bracket at which it is suitable for us to go into the EMS? If not, where is the rate to be found? Is it above $2·42 or below $1·48? If it is at the upper end of the scale, how do we reach it? If it is at the lower end, we may get there all too soon. With all the Chancellor's influence, which he has so successfully exercised, Britain is not a full member of the EMS. Perhaps he will give us a detailed explanation why that is so.
My right hon. and learned Friend has persuaded the members of the International Monetary Fund to increase their quotas by 47·5 per cent. I know that he would have liked to go further and that it was impossible to persuade the Washington Administration to do so. My right hon. Friend the Secretary of State for Industry has said that the amount available to the IMF was doubled. I was not aware of that.

Sir Geoffrey Howe: The usable resources were doubled. My right hon. Friend will appreciate that not all the resources available, either under fund quotas or even under the general arrangement to borrow, can actually be drawn. However, a large proportion of the GAB resources—I think 75 per cent.—is usable. An increase of that kind is worth a great deal more than an increase of just under 50 per cent. in the fund's resources. The managing director, at the conclusion of the proceedings, calculated that by more than doubling the GAB and by increasing the fund's resources by just under 50 per cent. he had doubled the resources which he could effectively use. There was a doubling of usable resources and slightly less than a 50 per cent. increase in the fund's quotas.

Mr. Heath: I am grateful to my right hon. and learned Friend for that explanation, because it emphasises that the necessary bridging of the developing countries' deficit is less likely to be achieved by the quotas, which have been increased by 47·5 per cent., and by the increase in the general arrangement to borrow. If we estimate that the gap is about $85 billion—it may be slightly less now as the price of oil has been falling and it may stand at about $70 billion—the gap will be bridged only partly by the general arrangement to borrow resources. There is also the limitation that the quotas cannot be used until 1984. I give

my right hon. and learned Friend credit for having brought forward the date on which the quotas will be increased, but they will still not be effective in bridging the gap this year.
I understand that my right hon. and learned Friend is to bring forward a discussion on the special drawing rights. I strongly support him in adopting this approach. There will then be another battle about getting approval for special drawing rights, especially from Congress. If Congress refuses to accept 47·5 per cent. or an increase in the IMF quotas, what will everyone else do? This is a major political question. My view is that we should say, "Very well, the United States wishes to opt out but the rest of us will go ahead." I do not believe that it is possible to allow every member of the IMF or the international community to be blocked by Congress and prevented from implementing a measure that is essential in enabling us to deal with the developing countries, and especially to give those countries the resources that they require to get world activity going again.
I direct my remarks to the overall economic activity of the world and of Britain's role within it. My right hon. Friend the Secretary of State for Industry quite rightly said that there has been increase in demand. That has been consumer demand to a large extent. How is this accounted for? There has been a reduction in the Government's public sector borrowing requirement—the right hon. Member for Hillhead touched upon this—and the banks have increased their loans to finance consumer consumption, which has increased. Is that the right way to deal with the economic problem?
When consumption increases there is an increase in imports and then, often unnecessarily, there are doubts about our currency. It is not realised that we have to import more raw materials before we can manufacture goods and export them. We are thus faced with the sequence of difficulties from which we have suffered in the past. The public sector borrowing requirement is more limited—as the right hon. Member for Hillhead said, that is in part because of the reduction of such things as contingency funds—but bank loans are increasing, and in the process consumer demand is being financed. Is this the process that we need to go through to get our economy alive again?
I do not believe that we can bring our economy to life once more unless we are able to deal with the problem of the indebtedness of the developing world, the interest that it has to pay and its repayments. We do not always recognise that such measures as have been taken will deal with the problem for about a year and that they will then have to be renewed over a period in an attempt to correct the problem. In the meantime the imports of the developing world are decreasing and will probably drop still further. That is bound to have an effect on our economy in the developed world. The indications in the world economy are that we shall not get anything like the growth that some are forecasting. Moreover, I cannot see that the developing countries will produce the surplus that the IMF sometimes calculates as a result of its actions. All these factors put the international situation in doubt.
I am grateful to my right hon. and learned Friend the Chancellor of the Exchequer for the actions that he has taken in international finance, but I believe that much more is required. I think that he has room internally for an increased public sector borrowing requirement if that becomes necessary either because of oil developments or


because he recognises that he can do more through capital investment to encourage the economy generally. I urge him not to be tardy in his well-doing.

Mr. James Callaghan: I agree with the concluding remarks of the right hon. Member for Sidcup (Mr. Heath). I add that I think we would be unwise in Europe to rely upon a continued United States recovery. Undoubtedly it will have an effect on Europe's position and may enable us to grow rather faster than we would otherwise do during the next 12 months.
A battle is going on between Congress and the President of the United States, and unless the President reduces defence expenditure he will have a budget deficit next year that will be of horrific proportions in the eyes of Wall street. There is little doubt that if that happens interest rates in the United States will increase and its recovery may well be abortive. These consequences may not emerge in time to prevent the re-election of President Reagan—I think that the recovery will last until then—but they may well abort any possible recovery that may seem to be breaking out in Europe and in our own country.
The world is more divided now on its economic objectives than at any other time that I can recall. This is because of the break-up, as the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) said, of the Bretton Woods agreement and of the solidarity that was engendered following General Marshall's offer, the approach of the OECD and the building of the Alliance. This structure has begun to dissolve and some of the complacency that I hear is not justified when we consider the disarray in which the West stands.
There is no agreement, as the right hon. Member for Sidcup said, on the treatment of debts of Third world countries. Even given the increase in resources of the GAB and elsewhere, it is highly likely that the debt problems of Venezuela, Mexico and Brazil will have to be dealt with again. I do not know that we are in a position to do that, even though we have the resources, for political reasons. That is one problem.
There is the disarray in the exchange rates, to which the right hon. Member for Hillhead referred. If I may add a personal historical note, when Giscard d'Estaing and Helmut Schmidt were anxious to set up the European monetary system we had breakfast together to see whether this country would take part. I was against it then for various reasons, including the one mentioned by the right hon. Member for Sidcup. However, as the right hon. Member for Hillhead said, there is no doubt that on the broader canvass we need something approaching Bretton Woods, which for many years gave us faster growth than the world has since seen.
One of the major tasks at Williamsburg should be to give directions to those who can work out the details that they should attempt once more to achieve greater stability between European rates, American rates and the yen, so that we can return to something closer to the system that gave us so much prosperity.
The third issue is that of the trade war that has begun with the United States. I know that Ministers are there trying to stop it. I should regard it as catastrophic were we to embark upon such a trade war. The common agricultural policy, the agriculture war that has broken out

and the cross-subsidies that are now taking place mean that our position as an island nation, dependent for so much of our prosperity on our international trade, is in greater danger that I have ever known. That is coupled with the disarray in oil prices. I do not believe that they will stay at their present level. I belive that they will become lower. If they become too low, there will be less drilling in the North sea and elsewhere.

Mr. Nicholas Baker: Does the right hon. Gentleman agree that the disarray in the West and the difficulties of Third world countries can be ascribed to the irresponsible inflation in Western industrial countries?

Mr. Callaghan: I should not agree wholly with that. Inflation has clearly played a part, but the lack of demand for Third world resources, commodities and materials has also played a large part. The prices that they received did not keep pace with their requirements. If the Western world increased its demand, that would have a beneficial effect upon the Third world's indebtedness.
I fear—I say this with regret—that if the worst of the four matters about which I have been talking were to come to pass we should find countries being driven much faster towards protectionism. Perhaps the Chancellor has helped to save the day by taking part in the discussions that led to the revaluation of the deutschmark and the devaluation of the French franc. Only time will tell whether the French were wise to push for such a small devaluation. They might have been wiser if they had concentrated less on national pride and gone for a little more in their pockets, but that is a matter for them. If we continue in this way, the pressures for protectionism will undoubtedly grow.
I want to talk about the domestic scene. I was taken by the idea of the right hon. Member for Hillhead when he said that it would be sensible to exclude the repair side of the construction industry from VAT. I do not know what the bill would be, but I thought that he was making a sensible proposal. New building, apparently, is exempt from VAT, but repairs are not. One surely is as essential as the other. The Government would be sensible if they considered this problem.
I have a vested interest in studying the Government's record since 1979. After all, I was put out of office on the basis of what the Government were proposing to do. Without boring the House, I should like to remind it of what the Government intended. Let us see how far they have fulfilled their undertakings and the policies upon which they embarked. If we summarise the past four years, I believe that they underestimated the problems that they would face when they came to power, although there is no doubt that they were warned about them.
The difficult position that the Government inherited needed skilful handling, but they turned to gross butchery, with the result that they destroyed confidence in industry with their first Budget. Every year since then they have been far too optimistic about the effect of their policies. They have misled the country—not deliberately perhaps, but because they misjudged the position themselves. They have raised hopes constantly, only to dash them. The only conclusion that one can reach is that when the Government come to the end of their term of office the country will be poorer than they found it and that the poorest and the weakest will have suffered most.
The Chancellor of the Exchequer, in a speech in April 1979, a month before the general election, said three


things which I am sure he believed. He promised reduced tax for all, rising production and real prosperity. Not one of those objectives has been fulfilled. Taxation is higher, not lower, except for the very rich; industrial production, instead of rising, has decreased by 12 per cent.; and the national wealth has diminished by £3·5 billion. I am sure that the right hon. and learned Gentleman believed what he said, but he has failed. I am sure also that he was sincere when he said in the same speech that the Conservative Government would ensure secure, well-paid jobs.
I shall not talk about macro-economics. I shall talk about my constituency. On the eastern side of Cardiff there is a post-war mixed estate of council and private houses. As a result of the Chancellor's four-year stewardship, one man in every third house is unemployed. In the ward of Adamsdown, in the inner industrial area of the capital city of Wales, there are 1,100—to use the jargon—economically active men. Of those, 633 are out of work, according to the latest estimate. There are 467 in work. We talk about unemployment in social and economic terms. I say to the Chancellor and all Ministers that it has become a moral question. I am not content that we should have economic arrangements that leave so many of our people sitting idle when they should be working. What kind of society do we think we are creating?
Since the beginning of the year—Mr. Speaker, you know the city, as I do—there has been a constant succession of company closures in Cardiff. In the first firm about which I learnt 270 employees were to be sacked in the new year. The reason that it gave was that there were no prospects of any significant improvement in market conditions despite
Major cost reductions achieved in co-operation with the employees.
I heard what the Secretary of State for Industry said about the unions. I hope that he will remember that for every case that he can quote there are 100 unheard of where there has been major co-operation but unemployment has still resulted.
The second firm is well known to you, Mr. Speaker. It is Gripoly Mills. It is a small firm that is 100 years old. It has survived many blizzards, but it has been taken over by a multinational company. I do not know whether you are aware, Mr. Speaker, that the mills are to be closed and 65 jobs are to go. The managing director has written to me saying that that is despite the employees' co-operation, which has been excellent throughout. Will the Secretary of State for Industry kindly remember that?
The letter goes on to say that
for the last two years turnover has been depressed. The forward business forecast shows deterioration. It is no longer possible for us to sustain this loss.
In the third company, 160 employees are to lose their jobs. The reasons are continuing financial losses, marked deterioration in demand and shortage of orders. The company wrote to me:
Without the efforts on the shop floor, in the offices and in the sales territory to cut costs, improve quality and get more orders, our financial position would have been much worse.
I ask the Chancellor and the House to note that there are two common factors in all three companies. The first is the co-operation of the employees, to which the companies pay tribute, and the second is the lack of demand. I am not speaking about a long period. The companies have notified me of their intention to close—indeed, two have already closed—within the past

eight weeks. The first letter arrived on 14 January and the others followed it. Where are the "secure, well-paid jobs" of which the Chancellor spoke?

Mr. Arthur Lewis: Ian MacGregor!

Mr. Callaghan: I am not talking about Peter Rabbit or anything like that. I know the difficulties that have existed—previous speakers have referred to them—but the Chancellor cannot escape his responsibility; his misjudgments of economic, fiscal and monetary policies have contributed heavily to what has happened in our country. He was warned by the right hon. Member for Sidcup that the policies in his first Budget four years ago would not work. We remember that in that first Budget the Chancellor nearly doubled VAT and put up MLR to 16 per cent. and later to 17 per cent., so that companies had to borrow and pay over 20 per cent. interest on their borrowings. Of course the Chancellor killed confidence, and it has never been recovered.
As Leader of the Opposition, I had to make an immediate response to that first Budget. When I heard what the Chancellor said I was aghast and I said that he was embarking on a most colossal gamble with the future. It was a gamble that has failed.
Earlier, I had warned the Prime Minister about her error in supposing that the control of the supply of money would bring us prosperity. I said:
The sweet simplicity of her statement hides a multiplicity of bankruptcies and tens of thousands of men and women out of work."—[Official Report, 14 December 1978; Vol. 690, c. 925.]
I underestimated the number.
The Government were warned. They were told what would happen, but we were ignored. Ministers were conscious of their rectitude, confident in their remedies, impenetrable in their complacency and gross in their error. As I said those things at the Dispatch Box, all the new Conservative Back Benchers, rejoicing in their victory and arrogant in the fact that we had been defeated, laughed and attempted to put me off my stroke. Four years later they are bound to agree that there was much more in that criticism than they conceded at the time.
Of course the Government did not have an easy inheritance in 1979. We never pretended that they did., and that was one of the reasons why we lost the election. We did not pretend that all the issues would be soluble. However, the Government inherited an economy which was growing and in which investment in new plant and machinery was high. They even inherited trade unions that were not instinctively hostile. In some ways, because of the winter of discontent, they were as hostile to me as they were to the Conservatives. The situation needed skilful handling, but did not get it.
The Government doubled VAT, increased the MLR and encouraged the sterling rate to rise to $2·33. Where is it now—$1·48? There has been a fall of about 60 per cent. They scolded and sneered at trade unions instead of trying to win their consent. My hon. Friends remember the attitude to trade unions, which was demonstrated in speech after speech. The Government also wasted parliamentary time and energy on irrelevant legislation to fritter away national assets such as aerospace, oil, telecommunications and the ports.
That is not all. The Government are culpable through their constant misjudgment of the effects of their policies. Let us look at what they said. In 1980 the Treasury forecast


that that would be the worst year. In 1981 the Chancellor said that the economy should pick up from there on. In 1981 the Secretary of State for Energy said:
Better times are clearly in sight.
In early 1982 the Chief Secretary to the Treasury said:
We have embarked on a path of steady recovery".
The actions to which he was referring were aborted a few months later. In 1983 the Chief Secretary said:
Evidence of recovery is all about us.
Why should I believe them when they have been wrong so often? Given that record, why should anyone believe them? Prospects are brighter? It is like taking a penny candle into St. Paul's cathedral to illuminate it.
The Government tell us that their major object is to continue to reduce inflation. They still cling to the belief that if they reduce inflation—we do not know to what level—it will lead to spontaneous and substantial economic growth. I tell the Chancellor that he is wrong. The longer that he persists in his policy, the worse our industrial position will become.
We have not only the evidence of the past four years to disprove the Government's beliefs. I can go back to the 1930s, when inflation was non-existent. As a young clerk in the Civil Service I used to get an increment every year, but for four years in a row the fall in the cost of living bonus, based on the retail prices index, washed out my increments and I was on the same salary for four years.
There was some growth in the 1930s in one or two favoured areas, but it left whole regions dying and they have never recovered. The Government have failed to read the lessons of history. The damning thing for those of us who have argued year in and year out for increased productivity is that, in the absence of increased demand, increased productivity today leads not to new jobs, but to higher unemployment. The gulf between the Government and their critics, the number of whom is growing, concerns the level of demand.
Unemployment prospects are so tragic for whole groups of our young people that a new approach is needed. As the right hon. Member for Hillhead said, the Government were wrong in concentrating so much on the monetary supply in the first half of their term of office and in concentrating so much on the PSBR in the second half.
There were days when Chancellors took an approach that was much more civilised and less concerned with mumbo jumbo. We were concerned with four things being kept in balance—growth, stable prices, high employment and the balance of payments. Those are the issues which matter—not the size of the PSBR or concentrating on M3 as though it is the only factor which matters and which would solve all the problems.

Mr. Eggar: Will the right hon. Gentleman give way?

Mr. Callaghan: The hon. Member for Enfield, North (Mr. Eggar) knows before he interrupts that that was the doctrine uttered by Ministers, to our intense disgust, year after year.

Mr. Eggar: The right hon. Gentleman referred to the four aims that he was pursuing, but was not the culmination of his efforts to reach those aims summed up by the 1967 devaluation?

Mr. Callaghan: I do not think that it was. I shall not be tempted into giving the whole history of the matter, but

there was a strong case for devaluing in 1964, as a result of what we inherited from the previous Government. For reasons that I will not go into now, we did not devalue, even though the OECD suggested that we should. I shall write all this in a book, which I am sure will be read avidly.
Our efforts were summed up in the fact that at that time we were getting a 3 per cent. growth rate, a high level of investment, the level of unemployment was about 400,000—I shall be corrected if I am wrong—and a balance of payments. Only oil has saved the skin of Conservative Members. Let there be no doubt about that.
A major priority must be to change the Government's policies. I trust that when the election comes we shall get rid of the Government. Individual measures have been put forward. I do not intend to go into them now. I know that times are hard for the Chancellor of the Exchequer. He was in Brussels this morning and is now on the Front Bench. That is a test of his durability. I do not wish to be personally offensive to him, because I know the task that he has to undertake. However, the right hon. and learned Gentleman has been wrong in the policies that he has followed. They need changing for moral as well as economic and political reasons. I beg him to do so.

Sir William Clark: It is a daunting experience, as a Back Bencher, to follow five Privy Councillors, including two ex-Prime Ministers. It comes ill from the right hon. Member for Cardiff, South-East (Mr. Callaghan) to criticise the optimism of my right hon. and learned Friend the Chancellor of the Exchequer. I recollect that when he was Chancellor, according to him, he had got it right and we were going round the corner, "steady as she goes". However, his optimism was misplaced. I remind the right hon. Gentleman, with no rancour, that his Government incurred an overseas debt of $22 billion because of their disastrous economic policy. This Government have paid back $10 billion of the debt that the right hon. Gentleman's Government incurred.

Mr. James Callaghan: I have heard that story so often that I have brought the figures with me. The hon. Gentleman is wrong. It is true that during the period of the Labour Government our debts grew by $13 billion. It is also true—but it is never mentioned by the hon. Gentleman and others—that our assets grew by $15·5 billion. We were better off at the end than we were at the beginning.

Sir William Clark: That is an extraordinary argument. One cannot refute the fact that the Government have repaid $10 billion of the debt that the right hon. Gentleman's Government incurred. Whether the debt was $17 billion or $22 billion, we have repaid $10 billion.
It was a pleasure to listen to the right hon. Member for Leeds, South (Mr. Rees). I think that this is the first time that he has taken part in an economic debate. I was absolutely astounded to learn that he taught economics. Apparently one of his pupils writes in Lloyd's Bank Review. I do not know whether that pupil had another tutor after the right hon. Gentleman. The right hon. Gentleman tried to argue that the position today is analogous to that in 1944, when Japan and Germany were devastated and the whole world was crying out for goods. If one is comparing unemployment, it is ludicrous to think that the circumstances then were the same as today.
I welcome the Budget. It should not be seen in isolation. It is one of five Budgets. The various measures for business have been accelerated and increased in the Budget. Over the years business has had assistance, in the form of tax relief and so on, worth about £3 billion. It was right that this year the emphasis in the Budget should be on the direct taxpayer. This year he gets relief worth about £2 billion.
It is not fair for Opposition Members always to say that when we took office we took over a thriving country. If one looks at the record, one sees that inflation, unemployment, interest rates, public borrowing and overspending were rising. The Government had to honour many unpaid cheques from the last Government.
The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) lectured us, saying that the Chancellor takes the public sector borrowing requirement as his only criterion. That is absolutely wrong. He went on to speak about the national debt and gave the impression that the PSBR and the extent of the national debt did not matter in our economic life. I talk in down-to-earth language. The British taxpayer, not repaying the national debt but merely paying the interest, is paying £1·7 million every hour. I should have thought that to increase that figure would be economic madness. I am delighted that my right hon. and learned Friend has reduced the PSBR to 2·75 per cent. of the GDP.
We are criticised by the Opposition that it is not a vote-catching Budget. The Opposition do not realise that the Government under the Prime Minister are not opportunists. We want to win on our policies. It ill becomes the Opposition to say that it is not a vote-catching Budget, but, if it had been, and if we had given more or not enough tax relief, we would still have been criticised. Presumably the Conservative Government cannot be right in any way.
I welcome, as do many others, including, I believe, the Opposition, the help given to smaller businesses. The reduction in corporation tax from 40 per cent. to 38 per cent. is good. The business expansion scheme is excellent. I am delighted that there has been some relaxation in the capital allowances, which help investment, which helps business. The capital allowance on industrial buildings has been extended to commercial buildings with warehouses. It is agreed on both sides of the House that capital allowances for tax purposes stimulate investment in industry.
Under successive Governments over the years capital allowances have been given to manufacturing industries. I am not suggesting for one moment that we should not have done that or that we should cease doing that. However, one must realise that in manufacturing industries investment means that a new machine is put in that can be operated by eight men instead of 10 men. Therefore, investment to a certain extent aggravates unemployment.
Service industries are more labour-oriented than manufacturing industries. In our fiscal system we should have a deep look at our service industries—tourism, hotels, and so on. The shibboleth is that only manufacturing industry is of any use. I am not denigrating that industry, but our service industries and invisibles are the things that give us our balance of payments surplus.
I welcome the fact that at last the Government have accepted that there may be cheaper ways for business to borrow than straight through a bank. I shall not go into the technicalities. I am delighted that my right hon. And

learned Friend has introduced the deep discounted bonds. I am delighted also that he has decided to introduce free ports, which will and must provide more jobs. One encouraging thing on the job horizon is the fact that there are now over 2 million self-employed people. That is a very good trend.
In the coming year, public spending will be contained at 43·5 per cent. of GDP. That is still too high. Overmanning in the public sector is the scourge of our economy. Employees in the public sector are a privileged class. They have security of employment. No one is ever sacked, irrespective of what might happen. They also enjoy pension rights that are not available to the private individual. Therefore, overmanning in the public sector should be looked at carefully. I am delighted that my right hon. Friend the Secretary of State for Social Services is at last undertaking a study into the NHS.
As I have said to no avail in previous economic debates, I am extremely worried about the issue of index-linked gilts, which merely put off the evil day when the taxpayer must repay. Last year, the Bank of England issued 2 billion such gilts. How many private or public companies have ever issued an index-linked bond? Obviously, they could not do it. I dislike the fact that the issue of a bond on a 10-year term will mean that the Government who issue it cannot possibly control the financial acumen or otherwise of the Governments who will follow. My fear is that we may borrow too cheaply today that which must be paid back in five or 10 years' time.
We should also pay more vigorous attention to the inflation rate within the public sector. On 19 March, the Daily Mail contained an excellent article which pointed out that in the last month overall inflation went up from 4·9 per cent. to 5·3 per cent. When that figure is broken down, it can be seen that inflation in the public sector went up from 12·5 per cent. to 13·4 per cent., whereas in the private sector it went down from 3·2 per cent. to 3 per cent.
The overall figure is, I believe, merely a slight hiccup which will not last. Our critics argue that inflation is now on the upturn, but they fail to take into account that under this Government inflation has come down from 20 per cent. to 5 per cent. It may well go up to 6 per cent., but such a hiccup does not mean that inflation is about to take off. I therefore urge the Government to look closely at the inflation rate in the public sector. Indeed, had the public sector matched the private sector on prices, inflation would now be even lower than it is. Consequently, for our future economic stability it is essential to privatise as much of the public sector as possible so that we can have real criteria on which business should be run.
I could go on about the public sector, but I would not like to give the impression that I am diametrically opposed to it. I merely feel that it should be much more efficient.
I welcome the fact that the Government will undertake a review of VAT. That seems to have been overlooked. Bearing in mind the administrative burden of VAT on small businesses, it should not be beyond the wit of man to be able to pay VAT on an annual basis. That would eliminate much of the form-filling to which small businesses are subjected.
Everyone recognises that the main problem is unemployment, but it is a confidence trick for any political party to suggest that it has the answer and can solve the problem overnight. It is harsh and cynical to hold out to our fellow citizens who are unemployed the prospect of a


Government, be they SDP or Labour, waving a magic wand and solving the problem of unemployment. I am delighted that my right hon. and hon. Friends never indulge in that sort of thing.
The Opposition's answer seems to be to throw money at the problem—that we should spend more Government money. We often talk about "Government money", which gives the impression that if the Government do nothing they are niggardly or mean. It is not the Government's money; it is the taxpayers' money.
President Mitterrand tried throwing money at the problem, and look at France now. The French did precisely what the right hon. Member for Stepney and Poplar (Mr. Shore) is suggesting. Where has it got the French?—[Interruption.] It is all very well for SDP Members to nod their heads and smile. The only difference between the right hon. Member for Stepney and Poplar and the SDP is that the right hon. Gentleman wants to spend £10 billion whereas the SDP wants to spend £8 billion or £9 billion.
We must create jobs which will be paid for by the taxpayer. We should pay tribute to the Government for introducing many schemes—such as the youth training scheme—that have cost the taxpayer about £2 billion. Therefore, it is wrong to suggest that the Government view unemployment without compassion. It is not the prerogative of the Labour, Social Democratic or Liberal parties to think that they are the only parties with compassion. If one looks at the record of successive Governments, one will see that the working man is better off under a Conservative Administration.
My right hon. and learned Friend has made a good start on the investment surcharge, which affects our saving potential. It is unfair that someone who belongs to a pension scheme, be it public or private, should get an income on retirement, whereas someone who did not have the opportunity of joining a pension scheme must save his money and get precisely the same gross income as the man in the pension scheme. It is wrong to penalise one person with an extra 15 per cent. tax.
The Labour party's policy seems to be coming out in dribs and drabs. I do not know whether the right hon. Member for Leeds, South has his hands behind the tiller or whether it is the former Prime Minister the right hon. Member for Cardiff, South-East. Whoever it is, Labour's policy seems to be one of class envy and of soaking the rich to pay for everything. It will not work, even if we return to the high penal rates of tax that we inherited in 1979. If we embarked on the policies of the Labour, Social Democratic and Liberal parties, we would have to borrow more.
The right hon. Member for Cardiff, South-East spoke about the borrowing requirement of the American Administration. He said that if they were that much in deficit, interest rates would not come down. There is no difference between America and Britain. If we borrowed more money, interest rates would increase in the long term.
The right hon. Member for Stepney and Poplar said that there will be a 30 per cent. devaluation. I have news for him. If a Labour Government came to power tomorrow, we would not have to devalue by 30 per cent. Indeed, we would not have to do anything, because the pound would collapse and there would be economic chaos.
The present Government have kept faith with the lower paid and the pensioners. For all the talk about 2·7 per cent. in May or November, the cold fact is that, after this Budget, the pension will have been increased by 75 per cent., while prices have risen by only 70 per cent. Of course we should like to give the pensioners more money and we should like to give the taxpayer back more of his own money.
We have embarked on something that I think is exciting. Opposition Members laugh. It is exciting, but only if one understands it. The Government have turned economic attitudes round. People now realise that we cannot get something for nothing. That has never been possible. We can do it for a time, but then we go broke. The general public realise that the Conservative Government have been implementing a policy of good housekeeping which will stand us in good stead.

Mr. Simon Hughes: I hope that it is significant that I utter my first words in the House on the first day of spring. The occasion may be doubly significant in that I follow not only to these Benches but in this debate a Member for the borough of Croydon. In 1949 Fenner Brockway wrote a biography of one of my most eminent predecessors, Dr. Salter, whom I believe you met, Mr. Speaker, before you were called to high office or had started on your journey to this place.
The borough from which my constituency takes its name was described by Fenner Brockway in 1949 as
a backwater in the life of the metropolis".
I shall deal with the economics of the matter in a moment, but politically one thing seems sure. Not only is Bermondsey no longer a political backwater; it is arguable that today there runs through it the strongest current in British political life. That may be because over many years, and particularly since they have been closed, massive pressure has built up behind the dock gates that have represented the industry and the economy of that part of south-east London, and that pressure has found its escape at last.
In 1884 the Bill to establish separate parliamentary representation for Bermondsey was introduced in the House by the Liberal Adminstration. The issue which concerned the first Member for Parliament for the area was one that is as commonly discussed on these Benches today. It was the issue of electoral reform. Seventy-five years ago my Rotherhithe predecessor, Mr. Carr-Gomm, argued for the representation of workers on the Port of London Authority. The demand for the proper representation of workers on the seat of management has not been heeded as it might have been in the intervening time.
Sixty years ago, in 1923, in an address to the electors of Bermondsey before a campaign that was successful, but—perhaps I know the feeling—not originally expected to be so, a Methodist minister and Liberal candidate, Rev. Kedward said:
The enemies are in front of us in plain sight: unemployment, poverty, sickness, bad housing; let us attack them with courage.
He continued:
There is no easy road to victory over such foes, no magic word which when uttered will banish cares for ever".
In the same year Dr. Salter made his maiden speech, calling for a national minimum wage and decent treatment for the people who start at the bottom of the heap. He said that
in a civilised society every worker has a right to a living wage.


That has been a principle, though not a practice, endorsed by Governments since then. He added that
wages have now sunk for millions of our people below the subsistence level".
I use his words because they are no less appropriate today. He added that
it is grossly unfair that the whole burden of that depreciation of the standard of life should be borne, as it is, by one class, and that the most helpless and the weakest class. If the country has to submit to a reduction of the standard of living, that should be universally applicable."—[Official Report, 7 March 1923; Vol. 161, c. 627–36.]
I listened to the Chancellor's Budget statement last week, and I ask him this: where are the reforms of justice and the social progress of sympathetic and progressive economic management? Why will he not consider giving the security and hope that his long-suffering fellow citizens in the inner cities need to hear from this place? Why could he not promise that they, when qualified adults, would not be left behind in the struggle for survival, and often not just left behind but also left out? Why, after 60 years, could he not ensure that people received a decent minimum wage? If he wants to see a monument to his four years of economic policy, let him come and look at my constituency. The Chancellor's Budget last week and the examples given by his colleague today reminded me, in a phrase that came to mind last Tuesday, of a Chancellor fiddling while Britain groaned.
My predecessor gave 36 years of distinguished service to the House and for much of that time served all the constituents whom I now have the honour to represent. He was joined in that task for a short time by my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins), until my right hon. Friend's seat was taken away by the process of democracy. In that election, in which my predecessor first stood as a candidate at Rotherhithe, there was one thing in common with my own—his Conservative opponent, like mine, lost his deposit. In a local election in Bermondsey two weeks after my own election, the Conservative vote fell yet again—this time to 3·6 per cent. The message is firm. The deserving people of the inner city are saying loud and clear that they have no trust in the Conservative Government.
In the words of the right hon. Member for Leeds, South (Mr. Rees), there is a rumbling of discontent. I, too, rumble with discontent. I come here to share that anger and discontent. As in the city of Cardiff, which I know well, as do you, Mr. Speaker, and as does the right hon. Member for Cardiff, South-East (Mr. Callaghan), male unemployment in my constituency is very high. In Southwark it is no less than 18·6 per cent.; yet the Chancellor holds back for a further seven months the restoration of the unemployment benefit abatement for those who need that money to live. Of all London's ratepayers, the residents of Southwark pay the highest inner city rates. Non-domestic ratepayers pay 245p in the pound and, as in Cardiff, are daily being driven out of business. The borough has the worst record for empty properties and hard-to-let accommodation of any authority in London. The Opposition can take no comfort in that, as it is the Labour party which is responsible locally.
Just before I took my seat in the House there was a pensioners' lobby here. One out of five of my constituents was represented by those who rightly came here to ask for a better deal. What do they receive in the Budget? The answer is a mean-minded and ill-timed administrative alteration in pensions that will lose 70p for a single person

and 110p for a married couple every week. They receive no help with heating or standing charges and are still penalised if they receive income which is additional to their pension.
At the other end of the age scale, the young, with whom I have worked for a long time in this city, are job-starved, often educationally deprived, having left school before the statutory age, and look with little hope at the future of communities where they want to stay. Therefore, as in the past, they are soon forced out—and will continue to be so, whether it be on bicycles or whichever other form of transport the Government have not seen fit to provide.
Yesterday's papers told us that the low-paid have lost at least £45 a year in real terms over the period of the past five Budgets. It is no benefit to them to know that people who earn £30,000 now get an extra £3,500 each year.
The economy of the past four years has done nothing for the inner city. That area is as bare, empty and lacking in progress as it was in 1979. Our people refuse to believe that there cannot be a better way. They also refuse to believe that they do not deserve a better way. I hope that I am not arrogant, but I am angry on their behalf. I am not only the newest but I am the youngest Opposition Member of this House. I am here to tell the House what people said by electing me three weeks ago. This waste and mismanagement of our resources, both human and natural, is, and I agree with the right hon. Member for Cardiff, South-East, not only unacceptable, but immoral too.
The people of Bermondsey and Southwark are, however, spirited and have not yet given up the fight. The spirit that led them to resist some of the worst attacks that the city knew during the second world war has led them, in peace, to resist the destructive attacks of politicians in their turn. However, they cannot resist for ever. They have already been generous. They were generous when my learned predecessor made the mistake of saying that the docks would close only over his dead body. They forgave him for that. They were also generous to the Leader of the Opposition when he made similar statements about an election not many weeks ago. They spared him from that. However, they cannot be generous for ever. They have turned to me and I, above all, now turn to the House to remedy their problems.
William Wilberforce died 150 years ago this year. It was his part as a reformer to liberate the people who were enslaved abroad. At home, Gladstone and Lloyd George followed that tradition, as did others who turned their attention to inner cities where the work was done and where the workers remain. My politics are to be those politics of liberation. I am anxious to liberate our people—those whom I can help—in little ways as we are allowed to do, from enforced idleness, unjustified discrimination and harmful dogma.
I have news for the hon. Member for West Stirlingshire (Mr. Canavan). He seems to think, to judge from his comment when I took my seat, that I shall not be here for long. I can tell him this. I shall be here for as long as is necessary to work for those people who sent me here to get them back to work.
I conclude with a quotation from a small guide which my library provides for those who want to know about the history of the constituency which I now have the honour to represent. It says:
People are right to be proud to say 'I am from Bermondsey'.
This little area has a great history.


In the old times it was the place of Chaucer, Shakespeare and, later, Dickens. It continues:
In Victorian times it was at the centre of London's trade and industry. Later, it took a lead in social reform. Now is a time of change when Bermondsey, like its neigbours in North Southwark and Rotherhithe, awaits new developments.
The tide of economic welfare has flowed out far enough and for long enough as well. Although there may be an appropriate analogy between my arrival here and the quiet, timid and, as yet, inexperienced first cuckoo of spring, I hope that the Government will listen and learn that it is still not quite too late to turn the tide and to come to the rescue of the people who, at the moment, are beached and waiting for help.

Mr. Charles Morrison: The hon. Member for Bermondsey (Mr. Hughes) arrived at the House as a result of what is by any standards a remarkable electoral triumph. He said that Bermondsey had been thought of as a backwater. There can be no doubt that, recently, it has been thought of as a seashore on which tides ebb and flow. Because of his triumph, the House had high expectations of the hon. Gentleman's speech. He has more than lived up to those expectations and the House will join me in congratulating him on his speech.
The hon. Gentleman follows a distinguished predecessor and the House will appreciate what he said about him. His predecessor was a great character. May the hon. Gentleman go a long way to fill the gap that his predecessor's departure has left. All hon. Members will have enjoyed the hon. Gentleman's speech, not least because he did not make the mistake of being non-controversial. I understand that Mr. Disraeli was so controversial in his maiden speech that he did not get far as he was shouted down. Rightly, the House was more polite today, but perhaps it will not be next time. Nevertheless, I must admit to having considerable sympathy with many of the anxieties that the hon. Gentleman expressed.
Like many other hon. Members, I should like to welcome many of the Budget proposals and congratulate my right hon. and learned Friend the Chancellor on making them. I am glad that he resisted the siren voices—perhaps they were not so strong—to reduce the basic rate of income tax. Instead, and rightly, he concentrated on raising the threshold. In addition to helping people on low incomes, that can do nothing but help to stabilise wage demands.
The further cut in the national insurance surcharge is excellent news, although I am a little disappointed that that pernicious tax cannot be abolished. The proposal to legislate to enable the designation of free port sites is imaginative and sensible. Last May, I was part of a parliamentary delegation that went to the Miami free port. I was impressed by what I heard and saw. There is no doubt that free ports are attracting a great deal of trade. I see that it is estimated that between 1981 and 1985, as a proportion of the world total, trade passing through free ports will more than double from 9 per cent. to 20 per cent. It would be a pity if we were not in on that piece of action.
Although I accept the arguments for free ports in areas of economic expansion—most of the emphasis seems to

have been on their being established in such areas—I hope that the rejuvenating effects of free ports will be tested in one or two of our old cities such as Liverpool.
I am especially pleased about the restoration of the 5 per cent. abatement of unemployment benefit. The delay in doing so was an unfortunate episode which did the Government's reputation no good and it is a great relief that it has now ended. I trust that the Government will turn their attention to the need to improve benefits for the longterm unemployed in the next Parliament. The grinding boredom of being out of work, let alone the adverse effects on family life and self-confidence, is bad enough. It is that much worse if benefits are set at a level at which the unemployed can obtain only the basic requirements of life. If life is to be worth living, and if we believe, as I do, even if it proves difficult to provide for a fully employed society, that it is necessary to provide for a fully occupied society, the unemployed must receive benefits that will enable them to be occupied in a satisfactory and satisfying pastime. In that regard, the long-term unemployment benefit is inadequate and must be improved as soon as possible.
I am also very pleased that my right hon. and learned Friend has been able to make still further concessions for charities. The Budget contains many bouquets and lollipops that will help many people to feel a little better. Furthermore, it was consistent with the Chancellor's cautious attitude towards economic management, which he has displayed since he has been in charge. However, at this point, and not for the first time, I must part company with him. The Times said that the Budget
failed to convey a sense of vision and purpose.
That was a little unfair, because to me it conveyed the same vision and purpose as did his previous Budgets. The vision is that of the market place as the ideal mechanism. Therefore, the purpose is to have no purpose beyond the creation of some basic requirements—the control of inflation, low interest rates and control of the money supply. The Chancellor has done well on those counts, but there is precious little evidence that we are anywhere near his vision of the market place as the venue of Utopia. I cannot yet dismiss from my mind recollections of the nonexistent inflation, lower interest rates and the appalling unemployment of the 1930s to which the right hon. Member for Cardiff, South-East (Mr. Callaghan) referred.
As my right hon. Friend the Secretary of State for Industry said, ultimately people will control and influence the market, but people need encouragement. Therefore, I cannot force myself to believe that more active intervention by the Government into the market would do any harm. Far from it. Government measures to assist both large and small industry are a help, but they put nothing in the order book. Even if it is assumed that a mild economic recovery is under way, the outlook for a reduction in unemployment is bleak. Surely now the Chancellor can begin to build on the foundations to which he has referred so often. Surely now is the time to increase public capital investment, especially on roads, telecommunications and sewers. Such investment is needed now in any case and would provide jobs. What is more, it would provide jobs at no great cost to the Chancellor's policy.
Apart from Norway and Australia, Britain is apparently running the smallest Government deficit of the OECD countries. I am sorry to have to say it, but I regret that there is not more of a boost to capital investment. Furthermore,


we must note that in 1982–83 it is estimated that the shortfall in capital investment by nationalised industries will be £600 million, and by local authorities will be £1,300 million. What is being done about that problem, which I regard as serious? Why not also take up the suggestion made among others but especially by my right hon. Friend the Member for Taunton (Mr. du Cann) that private capital should be mobilised to finance public works? There must be scope for such an initiative. If such ideas are not adopted, I fear that the mild recovery worldwide will be stillborn at home.
As a farmer, I have long since learnt that adequate note must be taken of the uncontrollable elements. We must be prepared to show flexibility and to react to the prevailing conditions. The same must be true of economic management. If in his first Budget in 1979 the Chancellor had said that there was nothing he could do to stop unemployment rising to 3·25 million in 1983, he would have been told by his party to go away and think again to avoid that horror. But it has happened and, despite this Budget, he must still go away and think a little more constructively and sympathetically about how to cope with it.

Mr. Douglas Jay: I congratulate the hon. Member for Bermondsey (Mr. Hughes) on his excellent speech. Like him, I entered the House as a result of a by-election, although it was not as exciting as his. I am afraid that I cannot wish him as long a stay in the House as myself, but his speech was so good that I think he should join the Labour party.
Almost without exception today, and since the debate began on Tuesday, every speaker has agreed that great damage has been done to the British economy by the Government's policies since 1979. If I understood the hon. Member for Devizes (Mr. Morrison) correctly, he also agrees with that. All the economic indices that really matter—real income, employment, production and investment—are drastically down, and industrial capacity is being reduced every week.
It is no good saying that such destruction has been worth while to slow down the fall in the value of money, or inflation as it is called nowadays. Changes in money values are no doubt highly inconvenient and, other things being equal, are to be avoided, but money is only a means, although essential, to an end. The objective of economic policy is the highest possible real employment, production and living standards. To claim that one has destroyed real output in order to preserve the value of money is like saying that one has destroyed the car to preserve the speedometer, or sunk the ship to save the compass.
The main cause of Britain's economic collapse since 1979 has been the swarm of errors and illusions that goes buzzing round the minds of the Prime Minister and some of her colleagues, although, to be fair, the Chancellor never sounds as though he really believes them. The most damaging mistake has been the complete failure to control money demand in the economy.
My right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said that he would not talk about macro-economic policy, so I will say something about it. It is total money demand—strictly, the money GDP—not the total stock of money, which directly affects prices, employment and output. The United States Federal Reserve Board has now explicitly recognised that fact,

and, interestingly, as a result, the American economy shows some signs of recovery this year. President Reagan, in his economic report to Congress on 2 February, said that the Federal Reserve will
use its judgment to modify monetary growth rates so as to keep the growth of total spending in the economy (nominal gross national product) on the right track.
Why cannot our Chancellor forsake his fetishes—the money stock and the PSBR—and at least follow the President of the United States? Some of us have been urging this ever since 1979.
If one does not control demand in a modern economy, one is bound to get either unemployment or price inflation, or, if costs are rising, both at the same time. All the fiddling trivialities, some of them good in themselves, that the Chancellor has introduced in the Budget will make no difference if there is an overall deficiency in demand. The level of employment and production depends on the ratio of demand overall to the total of money costs overall. There is no hidden hand—nobody argues that there is—that brings these into balance unless the Government and the central banks do so. The right flow of demand can be defined sensibly as that which maintains full output and employment, and the right quantity of money is that which supports that level of demand.
Those of us who understand this correctly predicted from the start that the result of the present savage deflation would be exactly what it has been—several million unemployed and a disastrous fall in output. Like my right hon. Friend the Member for Cardiff, South-East, I could quote the prediction that I made in the Government's first Budget debate in June 1979. Those who swallowed all the monetarist mumbo-jumbo a few years ago are now saying rather pathetically that they never expected 3·5 million unemployed and cannot understand why it has happened. Not merely did some of us predict this correctly, but those countries which, in the past three years, have stuck to the crucial job of maintaining demand—Norway, Sweden, Austria and others—have all maintained employment and output far better than we have.
If anyone still argues that unemployment is increasing all over the world not through a mistaken policy but for some strange, long-term reason, I must draw to his attention two facts. First, the United States has increased its total employment in the past two decades by 40 per cent. Secondly, Norway has just about doubled its real standard of living in the past 10 years.
Then we are told that unemployment is due to that mysterious visitation from Heaven—a world recession. But there is a world recession today only because too many Governments are pursuing the same deflationary policies as the Prime Minister and the Chancellor here. "World recession" simply means that the world is suffering from a lack of the purchasing power necessary to set the wheels of production, employment and exchange moving again, just as in 1932–33. It is this deliberate deflation of demand that is causing the crisis in shipbuilding, steel, engineering, textiles and one industry after another; and we cannot cure such a crisis by special remedies applied to the particular industry when the cause is a general one covering the whole economy. The crisis will not cure itself any more than it did in the 1930s.
All the tedious repetition about the so-called money supply and the PSBR is now little more than ritual incantation. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) spoke about the PSBR, but he did not point


out that in recent years there has been virtually no correlation, in this or other countries, between the PSBR and the quantity of money, and very little between the quantity of money and the price level. The totem pole of the PSBR is the greatest economic nonsense of all as a guide to policy.
Many people blithely imagine—I heard one Conservative Member speak of the deficit this afternoon—that in the United Kingdom the PSBR is the same as a Budget deficit, and that this country has been running a Budget deficit in the past few years. But it has not. In the sense in which every Chancellor from Gladstone to Sir Stafford Cripps used the terms "Budget deficit" or "Budget surplus"—balance between current revenue and current expenditure—we have been, and still are, running a surplus throughout the past few years.
For example, in the 1982–83 Budget, the Budget surplus—the surplus of current revenue over current spending—turned out to be £6·6 billion according to the Red Book. This year it is to be £6·2 billion. That surplus is wholly devoted to the capital expenditure of public authorities, which this year is to total £16·8 billion. The PSBR—that curious animal—is not a deficit. It is simply that part of public capital expenditure that is not financed out of the revenue surplus and capital receipts. It is a queer definition, but that is what it is, and that shows that it has very little significance.
What this means is that public authorities as a whole—the Government, local authorities and publicly owned industries—are following a course that any private firm would regard as entirely prudent: financing some part of capital expenditure out of revenue or retained profits, and the rest out of long-term borrowing. The PSBR is thus a dubious concept of very little economic significance one way or another. On top of that, however one defines it, the PSBR is a good deal lower in this country than it is in most Western democracies.
It is only by ignoring this fact that some of our muddled monetarists reach the absurd conclusion that public capital expenditure is more inflationary than private capital expenditure. If that were true, the Government could, by privatising the Royal Navy, allow the Navy to buy as many warships as it wanted, because that would not affect the PSBR. Any argument that leads to that absurd conclusion must be wrong.
Let us, therefore, sweep away for a start this obsession about the PSBR. For one delusion leads to a whole swarm of others. Perhaps the worst delusion at the moment, and one that always pops up from the Prime Minister at Question Time, is the confusion between the spending of an individual and the spending of the nation. If the individual spends more than income, his or her trouble may follow, because the individual's spending does not increase his or her income. But if the nation spends more money internally, then the nation's money income rises, and if there is more real capacity available the rise in demand generates more production of real wealth.
To put the matter briefly, in the internal economy, a nation cannot earn more than it spends. If there is spare real capacity, higher Government spending expands income, wages, tax revenue, output and employment. Even the Red Book admits:

The growth of Government revenues in cash terms over the medium term will depend on the growth of incomes, spending and prices".
So the truth is that all these painful cuts that we have been suffering from, far from doing any economic good, are doing actual economic harm to the nation by further cutting down incomes, spending, output and investment in the next round.
From that fallacy follows another which I also hear buzzing in the Prime Minister's head at Question Time—the belief that some economic gain is achieved by throwing people out of work and into unemployment. If the nation is fully employed, as this country was for 25 years, the release of labour from one job enables the production of something more of something else. That is a gain. If, however, people are simply thrown on to the dole, nothing is achieved. When that happens—as is largely true of the present Government's policy—one is simply paying people to do nothing rather than paying them to do a useful job of work. As a result, we have what even Mr. Sam Brittan, in the Financial Times, described, on the day after the Budget—I quote his words because I cannot improve on them—as
the vast human and economic waste of unemployed resources side by side with unsatisfied needs.
One always wants to congratulate the Treasury Bench on something, but I can this year congratulate the Treasury Bench on only one thing: accepting the recommendation of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) to allow the sterling exchange rate to fall to a realistic level. That has at last given British industry some little hope.
For all these reasons, I believe that what is needed now is an internationally agreed strategy of steady expansion. I agree with the right hon. Member for Sidcup (Mr. Heath) that this is just as necessary as expansion at home. There is, after all, no point in having highly expensive summit meetings if nothing happens as a result. At home, in any case, the next step should be a much more drastic cut in interest rates nearer to the 3·5 per cent. achieved in the early 1930s which could be achieved now if the Government had not made the stupendous blunder of abolishing exchange control two years ago. That blunder, as those who read the financial press know, is forcing us to hold up interest rates whenever sterling falls. Following that, we need a steady and planned expansion in public sector spending with priority given—I agree fully with the hon. Member for Devizes—to investment and construction, which would in time stimulate private sector activity also. Building employment now is 20 per cent. lower than it was in 1979.
Indeed, so huge a proportion of our real capacity, even allowing for what has been destroyed in the last three years, now lies idle and wasted—we are probably losing £50 billion or £60 billion of potential income annually at the present rate at which the economy is running—that, at an early stage of expansion, direct restraint of prices and money incomes may not be essential. At a later stage, it certainly will be. The imperative need now, however, is to get the nation back to work and back to economic sanity, and to do so quickly.

7. 2 pm

Mr. David Myles: I am grateful for the chance to make a brief speech on a narrow constituency point. Unemployment in the Scotch whisky industry is at record


levels. [Interruption.] I recognise the interest of my hon. Friend the Member for Croydon, South (Sir W. Clark) in this important constituency subject. The hon. Member for Clackmannan and East Stirlingshire (Mr. O'Neill) informed the House last Wednesday that the labour force in the Scotch whisky industry has declined by about 20 per cent. since 1979. In the first three months of this year, about 1,000 jobs have been lost, including a considerable number in my constituency. Employment in the village of Knock has virtually disappeared with the closure of the distillery. The Minister said in reply to last Wednesday's debate that
Taxation is not the problem.
He added that
the problem is lack of demand for whisky. We have to address ourselves to the problem of finding things that people will buy"—[0fficial Report, 16 March 1983; Vol. 39, c. 314.]
To claim that the problem facing the Scotch whisky industry is simply lack of demand misrepresents the position. Demand has not increased according to the industry's expectations. There are two main reasons. First, the Scotch whisky industry, like every other industry, is suffering the effects of the prolonged recession. Secondly, there is the historic policy of successive Chancellors of taxing whisky much more highly than imported drinks like sherry, port and vermouth with which whisky directly competes. I do not understand that attitude. The persistent high levels of tax on spirits have encouraged consumers to turn to less heavily taxed alcoholic drinks. Before the Budget, taxation accounted for 80 per cent. of the price of a bottle of Scotch. Although the tax on Scotch whisky has increased proportionately slightly less than the tax on other alcoholic drinks, the fact is that the tax on Scotch whisky, in real monetary terms reckoned on alcohol content, has increased more than that on other alcoholic drinks.
The tax on a bottle of wine has increased by 5p a bottle. As a bottle of Scotch whisky contains approximately three-and-a-half times as much alcohol, the industry could reasonably have expected an increase of about 18p on a bottle of whisky. The increase is approximately 25p. The Government point out that the duty on Scotch whisky has been reduced by 28 per cent. since 1975. That small step in the right direction is welcomed by the industry. However, the tax on Scotch whisky still remains disproportionately high. Sherry, port and vermouth bear only just about half the tax borne by Scotch whisky in terms of alcohol content.
All alcoholic beverages compete with one another and different levels of taxation distort competition. The policy of successive Chancellors has been to place Scotch whisky in a competitively unfavourable position, which has led to increased unemployment in the industry to the advantage of our overseas competitors.
The policy of United Kingdom Governments of taxing spirits more highly than wine or beer for no reason other than that Scotch whisky seems to be regarded as a milch cow has been followed in other countries, particularly in the EC, to the disadvantage of Scotch whisky. For example, France now taxes whisky over 40 times as heavily as wine. From 1 April, the French Government will in addition levy a wholly new tax on spirit drinks equivalent to about 76p on a bottle of Scotch whisky but none on wine or beer.
The Community wine industry is also suffering from a drop in demand. However, in contrast with the Scotch

whisky industry, where decline in demand results in closures, lay-offs and redundancies, production in the wine industry is subsidised by guaranteed incomes for producers and aids for distillation. In 1982, over £200 million was given in subsidies to the wine producers.
We face a continuing prospect of high unemployment in the Scotch whisky industry. Unemployment in Scotland is more than 50 per cent. higher than the EC average. The Government must bring the taxation of Scotch whisky in the United Kingdom closer to that of competing alcoholic drinks, especially fortified wines. My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) said last Thursday that
the home market for Scotch can set the pattern and give a lead to the rest of the world".—[Official Report, 17 March 1983; Vol. 39, c. 421.]
Even more important, the Government should be more vigorous in protecting the Scotch whisky industry against unlawful protectionism in the EC. It is unacceptable that the French Government should have been allowed to levy' more than £70 million in illegal taxes on Scotch whisky by defying a ruling of the European Court of Justice for three years. The total amount from that unlawful tax since 1 January 1978 is £250 million. How many cases of unsold whisky does that represent? If this Government take the lead in bringing the taxation on Scotch whisky and other competing alcoholic drinks into line with each other and in fighting protectionism, there is every hope of employment in the Scotch whisky industry returning to its earlier levels and perhaps showing a net increase as well as earning the undying favour of the Scottish people.

Mrs. Renee Short: I cannot follow the hon. Gentleman in his predilection for whisky. However, I like the country he comes from, and I trust that he will not cross me off altogether. I am surprised that he did not refer to the competition that Scotch whisky distillers are facing from Japanese whisky, which is becoming available in this country and elsewhere, and ask his right hon. and learned Friend the Chancellor to impose import controls on it. Perhaps he will think about that.
I congratulate my right hon. Friend the Member for Leeds, South (Mr. Rees) who with great gusto opened the debate for the Opposition. He made some telling points. Hon. Members have heard some good Opposition speeches, especially that of my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) who made some interesting remarks when contrasting our earlier economic position to that of the present.
The Budget must be judged from its possible effect, first, on employment and, secondly, on the growth 'in the economy. The Budget assumes a continuing level of 3 million plus unemployed. I tell the Prime Minister, the Chancellor and the Secretary of State for Industry that nothing in the Budget will bring joy to the west midlands or to my constituency.
I am surprised that the Secretary of State for Industry had little or nothing to say about the construction industry. There was little hope for it in the Budget. In my constituency and in the west midlands generally 36,000 building workers are unemployed when they could be producing and repairing houses and building the new factory accommodation that is so urgently needed throughout the area. Hon. Members will have read in the


press that the building trade is disappointed with the Budget. It contains nothing much for construction workers.
British cement manufacturers are worried about Britain importing cement from West Germany. For the Government to allow it to continue is appalling. There is a good case for import controls. Britain's cement manufacturers are going out of business while West German cement is allowed into the country. Foreign cement does not conform with our standards or regulations. There are possibilities of great danger if large quantities of imported cement which do not meet British regulations and safety standards are used. The Government must examine the problem rapidly and stop the import of West German cement. Britain's cement industry must be encouraged.
As many right hon. and hon. Members on both sides have said, the Government are a disaster for young people. More than 100,000 young people have been without jobs since leaving school, not this year or last autumn, but since 1980. That must surely be a major indictment against the Government. The Prime Minister's continual alibi about more schemes and more programmes for unemployed young people fools no one, least of all the young people. The right hon. Lady said:
Unemployment will then not be an option for them."—[Official Report, 17 March 1979; Vol. 39, c. 345.]
That is their only option at present, and it will be so until the Government are removed. There are no jobs for them and the Budget will do nothing to help.
The Government have much to answer for. There is the sapping of morale, the undermining of confidence and the sheer waste of skill, enthusiasm and endeavour that is evident among disheartened young blacks and whites alike. There is also the treatment by the Government of skilled men, fathers of families, who are losing their jobs and their self-respect. These men find themselves in a difficult position when they have to support their teenage children at schools or colleges of further education.
I do not understand how the Secretary of State can put forward his brightly painted picture that everything will he all right with the irrelevant stuff in the Budget. That will make no difference to unemployment in the west midlands or to the other black spots in the country. Families are facing difficulties in keeping their bright youngsters in education because of the cost of travelling, meals, clothing and all the rest.
New ideas for industry, commerce and science and, therefore, the creation of new jobs should be developed at our universities, including the polytechnics, our famous Government research establishments and in research establishments maintained by industry. Their contribution is of supreme importance for our economic survival, provided that the major proportion of their effort is not squandered as it is now on largely ineffectual defence research, which does not benefit the civilian population.
There is no encouragement in the Budget for industry to invest in research or, since research is relatively cheap compared with development, in the results of research for their use in industry. This latter area is where British industry is not very effective. The costs in this area can be extremely high.
Britain has, as I mentioned to the Secretary of State for Education and Science at Question Time, although he did

not want to believe me, the lowest proportion of population in post-compulsory education compared with Japan, France, West Germany and Italy. Currently, 2·4 per cent. of the total population over school-leaving age is in full-time education compared with 5·8 per cent. in Japan, 5·7 per cent. in Italy—that is a surprising figure—4·1 per cent. in Ireland, 3–7 per cent. in France and 3·8 per cent. in West Germany. Britain's 0·5 per cent. figure for those at university is disgraceful compared with 1·6 per cent. in Japan and France and 1· per cent. in Italy. The encouragement given to young people to study science and technology is limited. Some of our universities have actually had the temerity to take on more students than the University Grants Committee said they should, and seven universities have been fined by the UGC for taking in too many undergraduates last autumn.
A total of nearly £250,000 is being withheld from the offending universities as a punishment for failing to cut the number of their students quickly enough. The universities being penalised are Dundee, Hull, Heriot-Watt—which has already been referred to—Swansea and Keele. They run important science courses. Heriot-Watt university in Edinburgh is, of course, closely linked to the oil industry but it is being fined £20,000 for taking on about 60 students too many in science and engineering. In a few years' time we may not have enough trained engineers for the oil industry if such nonsensical cuts are allowed to continue.
Swansea university is being fined £60,000. It admitted 120 more students than it originally planned for last autumn because it was satisfied that there was a need and that the additional 120 students would fulfil it.

Mr. Nicholas Baker: I am interested in what the hon. Lady has to say, but is she aware that the Government have ensured that any cuts in higher education will affect science and engineering less than the arts? Presumably that is what she wants.

Mrs. Short: I was not going to say that at all. The hon. Gentleman has put words into my mouth. When everyone agrees that our input into science and technology is insufficient, it is a scandal that we should fine those universities that have taken on more students. If they are fined £250,000, they will have to raise it from somewhere. Surely that money could be used for educating students. It is the economics of bedlam, but then with this Government that is not surprising.
Experience has shown that in British industry the first victim of retrenchment in staff and expenditure is research and industrial development. How can we expect British industry to be competitive and always ahead of its foreign competitors when the level of Government support in those countries is very different? With a bit of foresight and imagination the Government could have injected the financial motivation that is so badly needed. The same applied mutatis mutandis to expenditure on research and development in universities, polytechnics and Government research establishments, which are gradually being deprived of their staff and resources. Practically every Government research establishment that is sponsored by a Department has been compelled for the past two years to cut its research staff. That is the most shortsighted policy.
The Social Services Select Committee has been extremely concerned about the cuts in expenditure on


medical research and teaching staff which resulted from the UGC cuts that were announced. In December 1980, as soon as the UGC was informed of the cuts, the Government were warned of the effect on clinical medicine, but nothing was done by Ministers at the DHSS then, nor has been done by the Chancellor of the Exchequer now to put that right. Therefore, about 300 clinical academic posts will be lost by the end of this year. In the shortage specialties, such as dentistry, paediatrics and many others, that is nothing short of scandalous. A choice has then to be made between patient care and the staff's teaching responsibilities. That choice is entirely unacceptable for patients both now and in the future.
Representations have been made to me as a result of the developments taking place in many teaching hospitals. For example, at Bristol university one of the readers in perinatal medicine and paediatrics is responsible for running the neo-natal service in two major maternity hospitals which share about 10,000 deliveries a year and provide a regional service for the whole of the south-west. He also ran 12 one-month courses for 140 medical students per year. In addition, he organised and undertook research in perinatal medicine. However, he has been forced to give up all his undergraduate teaching in new-born medicine because his one university assistant has been cut. He was determined to keep patient care going, but the teaching part of his work has had to go. Thus, medical students qualifying at the university will not get the training and experience in the newborn care that they should have. That is very disturbing.
In many parts of the country the same is true of other departments. We are short of consultants in many areas of medicine. Health authorities are having to cancel their decisions to appoint additional consultants and, consequently, patients will have to wait longer to be admitted. Junior doctors are rightly heartily fed up with the long hours that they are having to work. The latest scandal to confront the Government because of their mean attitude to expenditure arises from the claim that medical students are prescribing drugs and possibly carrying out procedures which they have no right to do, are not trained to do and which they are not competent to do. That has arisen because of the lack of proper medical cover on night duty. Indeed, it was dramatically underlined by the disclosure in yesterday's edition of The Sunday Times that a man who was injured while in police custody in Coventry apparently suffered severe brain damage. When he was taken to hospital the only consultant available at the time was an orthopaedic surgeon. It was not until a week later that the man was examined by a neurosurgeon who should, of course, have seen him immediately on his admittance to hospital. By the time he was seen it was much to late and he has been kept ticking over on a life support machine.
That the Department should countenance the havoc being caused and should profess itself unable to find £10 million—the sum needed to make good the UGC cuts in medicine—and that the Chancellor of the Exchequer in the Budget should have ignored the position is, frankly, beyond belief. The damage being done both to patients and to training will be with us for a good many years yet.
The Budget is wretchedly inadequate for all those whom it should have encouraged and for all those who are suffering so bitterly after nearly four years of this Government. It does nothing to restore prosperity. The Labour party hopes very much that the Government's departure will not be long delayed. My right hon. Friend

the Member for Cardiff, South-East was right to say that this Government would leave the country and its people much poorer than they found it. Four years of damage is too long. The Government should go now.

Mr. Tim Eggar: I hope that the hon. Member for Wolverhampton, North-East (Mrs. Short) will forgive me if I do not follow her down the path she trod. However, I thoroughly enjoyed listening to the speech made by the right hon. Member for Battersea, North (Mr. Jay). I am sure that he will not be at all offended when I say that he is probably the only totally unreconstructed Keynesian left in the House and in that, at least, he has been completely consistent. I also much enjoyed listening to the speech made by the hon. Member for Bermondsey (Mr. Hughes), whom I have known personal].) for some time and welcome to the House.
Until today the section of my right hon. and learned Friend's Budget speech that attracted least attention was that devoted to the world economy. That is curious, because Britain, above all, is dependent on the state of world trade for its prosperity. We cannot now and never have been able to divorce ourselves from what is happening in the rest of the world. We are today faced with a unique crisis—a crisis not only among the developing countries but among the politicians of the West who have singularly failed to recognise the scale of the problem that confronts them.
It will be a severe test of Western democracies, and indeed of capitalism, to find a way of ensuring that we can reconstruct the debt of developing countries without putting intolerable strains on the domestic political position of those countries. It is an immense task, and I am pleased that my right hon. and learned Friend the Chancellor is already playing such a leading role. It is far too great a task to be left to the United States alone. We cannot possibly hope that increased activity in the United States will sufficiently regenerate the world economy. We need a major, sustained and imaginative initiative not only from Western countries, but from OPEC and the developing world. It is a problem which, unless we are careful, will engulf us all and make whatever we try to do at home irrelevant.
My purpose today is not to comment on the judgment that was inherent in my right hon. and learned Friend's Budget. Nowadays, the Budget debate is too late for talk about Budget judgments. One of the things that I found most surprising when I read some of the speeches from earlier days of this debate was the way in which senior Members of the House have consistently deplored comments in the newspapers about the various options that face the Chancellor. I have never understood why it is so important to have surprise on Budget day. I agree with the recommendation of the Treasury and Civil Service Select Committee that we should have more disclosure in the autumn statement and wider discussion about the various options that are available to the Chancellor. The time to debate the general judgment has come and gone. The Budget debate nowadays is a time to look at some of the details that have been put forward.
It is a trifle curious, when the Treasury apparently believes that there is some connection between the rate of growth of the monetary aggregates—whichever are chosen—and the rate of inflation, that we have almost identical targets when we have inflation of 5 per cent. as


we had when we had inflation of 22 per cent. If there is ever an argument against there being a linkage between inflation and the rate of growth of monetary aggregates, it is the Treasury that has put it forward.
I particularly welcome the importance that my right hon. and learned Friend the Chancellor has given to raising the tax threshold and to increasing child benefit. That was preferable to any decrease in the basic rate of income tax. That change will be particularly helpful to the lower paid and to widows. I hope that when the next Conservative Government come to decide their economic priorities my right hon. and learned Friend will give particular attention to dealing with the unemployment and poverty traps. I hope that we shall pick up the moves that were made in that direction in the Conservative Government of my right hon. Friend the Member for Sidcup (Mr. Heath).
There has been some sniping in the press and elsewhere at the different schemes that have been put forward to assist small businesses and engineering firms. I do not share any such criticism. There is always a limited amount of Government help available for industry, and it is right that the Government should decide their priorities and ensure that the money goes to those areas.
Lastly—and I do not wish to retain the reverse feeling—I would like to give a firm welcome to the changes in oil taxation. We should remember that the work that has been going on in the oil-related industries to supply the North sea has been a major area of growth in economic activity over the past 10 years. By its nature it is employment-intensive, and there has been a considerable spin-off activity right through from simple metal bashing—or not so simple metal bashing as my right hon. Friend the Secretary of State for Industry said—to high technology. For anyone who wishes to know about the spin-off from activity in the North sea, I can recommend a book that was produced by Shell last year.
Unfortunately, the Government, like previous Governments, have tended in the past to use oil taxation rather too much in place of the old-fashioned regulator. When the Government wanted more money, it has been all too easy to raise a little more from the oil companies which have no votes and are not necessarily popular. I warmly welcome the Government's provisions which effectively reduce the burden on companies exploring and developing fields in the North sea, particularly the way in which they have successfully geared that assistance towards companies which are operating in marginal fields and areas, including the satellite fields to existing major developments. My hon. Friend the Minister of State has played a particularly constructive and helpful part in that area, together with my right hon. Friend the Secretary of State for Energy.
The Budget has been described by Labour Members as uninteresting and boring. In many ways, that is its strength. It is not a Budget to catch votes. It is not a Budget that is full of assistance in one form or another to particular parts of the country. It is a Budget that continues the path that my right hon. and learned Friend the Chancellor set. I might wish that public expenditure was somewhat higher. Nevertheless, the Budget thrust is right, and I am convinced that it will put Britain back on the road to recovery.

Mr. Joel Barnett: I hope that the hon. Member for Enfield, North (Mr. Eggar) will forgive me if I find myself in complete disagreement with the conclusions at which he arrived. I do not propose to take up any detailed points of the Budget, because it was devastatingly condemned by my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) last week, and again today in excellent speeches by my right hon. Friends the Members for Leeds, South (Mr. Rees) and for Cardiff, South-East (Mr. Callaghan), and by the right hon. Member for Sidcup (Mr. Heath). Each in his way exposed the real tragedy of the Budget.
I want to speak briefly of the serious danger that underlies the Chancellor's Budget philosophy, not just in the present Budget, but continuously since 1979. Perhaps the saddest part of the Budget speech was early on when the Chancellor told us that he proposed to continue the same course.
Another serious danger would arise if the promises of the alternative economic strategy were not able to be delivered because there is an alternative economic strategy. The danger of the Chancellor's Budget philosophy stems from the way in which he is misleading himself and the country into believing that to persist with the present course will improve the prospects for the sustained growth of jobs, living standards and industrial output. It is hard to believe that the Chancellor still thinks that that will happen after four years of persisting with exactly the same policies and seeing the reverse of his aims being achieved.
Few serious economic observers believe that the Chancellor is right in assuming that persisting with the existing course will achieve all that he says it will achieve. The trouble is that the Chancellor will persuade some people. I do not refer to Government Members, because I doubt whether even they believe him. The Chancellor may persuade some people that his Budget philosophy will eventually succeed in achieving growth and all the other good things that he tells us about. When that does not happen—it is not happening and it is not likely to—there is likely to be a huge explosion from a despairing and disillusioned country.
I am talking not about this Budget alone, but about the cumulation of five Budgets, all stating, on no evidence, that if inflation comes down all else will come right—output, investment, living standards and employment. Year after year we have seen that not only is it not coming right with that sustained policy, but that the situation has been getting worse and worse.
As my right hon. and hon. Friends explained today and in previous debates, we all told the Chancellor the truth way back in 1979. My right hon. Friend the Member for Leeds, South made some interesting remarks about what was done by the coalition Government during the war and about what happened before the war that made people propose such policies. That exposes clearly that a nil rate of inflation will not achieve the results that the Chancellor leads himself to believe he can achieve.
The Chancellor is unlikely to achieve success with the policies in which he is trying to persuade the country to believe. Indeed, even international competitiveness has been achieved largely, as the Government admit, by the devaluation since last November—a devaluation which the Chancellor and the Prime Minister appear to regret,


although they now tell us about the beneficial effects of that devaluation. I assume from what they have said that they would rather not have had the devaluation and therefore not have had the improvement in our international competitiveness of which they now boast.
In spite of the evidence, which disproves the Chancellor's theory, and all the protestations about a cautious and sound Budget policy, the hope that the Chancellor offers carries with it serious dangers. All the better prospects that the Chancellor portrays can come on a sustained basis only from sustained and higher levels of economic growth, which are not likely to be achieved under the Chancellor's present policies.
No serious economic observer will imagine that under existing policies we can achieve a sustained rate of economic growth at much above 2 per cent. Indeed, for the next year or so, given what else has been done to the economy, it is likely that we shall not be able to sustain even that level for any length of time. That longer-term growth prospect, about which the right hon. Member for Sidcup spoke, led the Government to come to the conclusion that they should ask the Think Tank to produce its now notorious report. If we do not achieve more than a 2 per cent. sustained rate of economic growth—which seems likely under present Government policies—a Government who believe philosophically in a growth in personal income, regardless of what happens to public expenditure, will inevitably ask the Think Tank to come up with a policy that will enable them to cut taxation and to tell them what needs to be done to make cuts in direct taxation.
It is not an accident that the Think Tank report came to light. It stems from the Government's philosophy and inevitably led to the Think Tank, which is not made up of politicians worried about elections, saying that the only way to cut taxation was to destroy the welfare state. That is not surprising and I do not know why anyone was surprised. With a sustained rate of economic growth of 2 per cent. at best, and a Government who are philosophically opposed to growth in public expenditure but who want cuts in personal taxation, the people who made the proposals in the Think Tank report should not have been condemned by the Prime Minister and the Cabinet, but thanked for spelling out clearly what their policies will lead to.
Because of the political consequences, the Prime Minister immediately buried the report—after a democratic Government decision, of course. If anyone believes that that report will not be revived immediately after an election victory—which I hope will not be forthcoming—they misunderstand the Chancellor's political and economic philosophy.
If one starts from a low rate of economic growth, it is clear that there is no alternative for such a Government but to do what the Think Tank set them on the path to do. I fear that we shall return to that with all the dangers involved. It would be better for honesty in public life if the Government told the country that that is what is necessary under their policies if, as is all too likely, they do not achieve a sustained rate of growth of more than 2 per cent. a year.
The same applies to those of us who believe that there is an alternative economic strategy and that "TINA", as the Prime Minister has spelt out, is a nonsense. We also have

a responsibility to spell out the dangers in parts of the alternative strategy if we do not deliver what the strategy seeks to achieve.
My right hon. Friend the Member for Stepney and Poplar is aware of the dangers. Who knows the extent to which the alternative economic strategy depends on the annual national economic assessment? If public expenditure is to be increased, particularly in the capital sphere—as it should in present circumstances—the balance remaining for increased benefits and cut taxes will be minimal, even with the considerably higher borrowing that we can afford in the present economic circumstances. That will be shown in any future economic assessment. Until we have the economic growth we shall not be able to spend on both increased expenditure and increases in personal standards and benefits.
The difference between the present despairing course and the alternative strategy is that the latter can—I emphasise the word "can"—provide the growth. Indeed, there is a simulation on page 10 of the appendix to my right hon. Friend's "Programme for Recovery" which sets out a virtuous circle of veritable Utopian proportions. It shows that at the end of five years there would be real growth, allowing unemployment to be eliminated; inflation would be at 5 per cent.; living standards would be nearly 6 per cent. higher; there would have been substantial increases in public expenditure; the balance of payments would be in surplus of £3 billion; and the public sector borrowing requirement—if by that time anybody cared about it—would have been eliminated.
The snag with that simulation is the requirement of imposed pay restraint with incomes growth declining from 5 to 1 per cent., which I believe is unobtainable. I do not know whether the nod from my right hon. Friend the Member for Leeds, East (Mr. Healey) indicates agreement or disagreement.

Mr. Denis Healey: I assure my right hon. Friend that it is a nod of recognition.

Mr. Barnett: I am delighted to think that my right hon. Friend can still recognise me. I do not believe that pay restraint and a decline in the growth of incomes from 5 to 1 per cent. can be achieved and I doubt whether there are many who believe otherwise. However, it is an example of what can be achieved with a degree of agreement, which, sadly, I do not think is obtainable.
If we are to achieve something that is near to that, I do not believe that we need norms. I have been reading recently that the Labour party's policy for the next election will not include norms. I have no objection to that, because I am not necessarily in favour of norms. However, I have a feeling that some of those who do not want to talk about norms of any sort are not thinking in the same way as myself. They are likely to believe that we can continue with increasing incomes, benefits and public expenditure all at the same time. I do not believe that a national economic assessment requires a norm, but, within any reasonable assessment, a substantial increase in public expenditure in any given year will mean that there will not be a great deal left to permit growth in incomes and benefit. That will be so in the early years until we achieve growth in the economy.

The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): How will that be achieved?

Mr. Barnett: The Minister should be rather less interventionist when one remembers what he has managed to achieve as a member of the Government and as a supporter of them during the past few years. The Government have certainly not improved since he became a member of them.

Mr. Jay: Perhaps some humility would not be amiss.

Mr. Barnett: It is asking too much of the hon. Gentleman to show some humility. I ask him to cease interjecting, if only for the sake of his hon. Friends who wish to participate in the debate.
I do not believe that the alternative economic strategy would perform a miracle for the economy, but it could do much better than the policy that is being pursued under the Budget policy. It behoves us all to spell out the consequences of the options before us in words and ways that the public can understand. If we cannot achieve the option that is spelt out on page 10 of the appendix in the "Programme for Recovery" of my right hon. Friend the Member for Stepney and Poplar, the public should be aware at least of the alternative. The Government's alternative is the steady growth of unemployment even if they manage to achieve and sustain 2 per cent. growth. We are seeing now—it is no good the Economic Secretary to the Treasury shaking his head—that unemployment is increasing. We are told that there will be 2 per cent. growth in the coming year, but we are also told that the Treasury has given the Government Actuary an assumption that unemployment will rise by nearly 300,000. It is assumed that that will happen even with a 2 per cent. growth. If the Economic Secretary is telling me that the measures contained in the Budget mean nothing and that there will be a reduction in unemployment, I shall be prepared to take note of the shaking of his head.
For those of us who are unwilling to accept the Government's economic and political philosophy and who want to see an alternative economic strategy succeed, it is important that the dangers in the alternative strategy of pretending that all good things could be delivered in the early years are spelt out. The good things could not be delivered immediately and there would be considerable constraints. However, I have no doubt that if we told the public what could be achieved as an alternative to the present disastrous and hopeless course—we might not achieve the near Utopia to which I have referred—we could do very much better than if we followed the Government's course.

Rev. Ian Paisley: I am sure that the right hon. Member for Heywood and Royton (Mr. Barnett) will not expect me to take up his remarks.
The Labour Government's former Prime Minister, the right hon. Member for Cardiff, South-East (Mr. Callaghan), was extremely concerned about unemployment. He said that certain factories in his constituency have shed hundreds of jobs. I represent a constituency in Northern Ireland where many thousands of jobs have been lost. Courtaulds used to employ 3,000 in my constituency. Now it employs no one. ICI employed 2,000. Now it employs no one.
I was interested in what the Secretary of State for Industry said when he opened the debate. He claimed that one of the Budget's aims was to help small businesses. I

agree with the former Prime Minister of the previous Conservative Government, the right hon. Member for Sidcup (Mr. Heath), that small businesses will not solve our chronic unemployment problem. We need large businesses and large employers. However, in Northern Ireland we shall have to depend on small businesses.
An important sector of small businesses in Northern Ireland—road haulage-will be devastated by the Budget. Everyone will be aware that Northern Ireland is on the periphery of the United Kingdom and that road haulage is important. I received a letter from one of my constituents, who runs a small road haulage business, in which he set forth the position with great clarity. He wrote:
At present my firm consists of six employees: myself as transport manager, four lorry drivers and one secretary. I am particularly disturbed at the proposed 3 pence increase per gallon in the price of derv and the £470 per lorry rise in the heavy vehicle road tax. The financial consequences are summarised below:
A—4 lorries @ 15,000 gallons each per year = 60,000 × 3
Total increase at 3p per gallon = £1,800.
B—4 lorries @ £470 per lorry for heavy vehicle road tax = £1,880.
Total A and B = £3,680.
This will inevitably be deemed 'loss' since factory owners in Ulster are not willing to accept the necessary increase in freight rates. In employment terms three jobs will be affected; I will not be able to operate the additional vehicle originally planned, hence the loss of a 'driver' vacancy; the financial loss is equivalent to the secretary's wage so her job is in jeopardy, and the trade stimulated as a result of her employment will fall off thus putting at risk the position of one of my existing lorry drivers. A potential work force of seven is reduced to four.
In the Northern Ireland context the effects for the economy and employment will be far reaching, especially since, through peripheral location and lack of local resources or market, our whole economy is based on links with the rest of the United Kingdom and Europe; links which are met mainly by road haulage. Most of this operated through 'small business private enterprise'; the sector which the government constantly emphasises is the basis of the economy and the one which they pledged to encourage. Because of the inadequacy of the government created jobs in Northern Ireland surely encouragement of firms such as mine is essential.
That is a heartfelt cry from a small business man who, with many of his colleagues, will be affected by this Budget.
A Conservative Member talked about the position being exciting if it is understood. I do not find anything about unemployment in Northern Ireland exciting. I visit the homes of my constituents and speak to people who have sought to do a good day's work. Their wages are lower than those in the rest of the United Kingdom and the cost of living is higher. I feel that the House must look carefully at the position as it affects the people of Northern Ireland. I trust that those small businesses in Northern Ireland which will suffer from the Budget will receive some hope from the Minister.
I support those hon. Members who have spoken about senior citizens' pensions. Senior citizens in Northern Ireland say to Members of Parliament, "Whenever increases are announced for other sectors of the community, those increases are paid immediately. We have to wait. Why must we wait?" I hope that arrangements can be made for senior citizens to be paid their pension increase immediately so that they can enjoy what little help it may bring.

Mr. Michael Morris: The hon. Member for Antrim, North (Rev. Ian Paisley) made a powerful speech about the economic difficulties of


Northern Ireland, as he did earlier on a Standing Order No. 9 application. We should all reflect upon the fact that the antics of certain senators and Congressmen over the other side of the water are no help to the Northern Ireland economy.
There is one central point that is important with regard to the Budget. There has been criticism in the national press and from the Opposition that the Budget contains no discernible long-term strategy. I venture to suggest that that is too facile a judgment of what my right hon. and learned Friend the Chancellor proposed in his Budget.
I know that it is unfashionable for politicians to be consistent but, having said that, my right hon. and learned Friend's strength is that he is consistent. Hon. Members would do well to remember that in the real world of the money markets people look for consistency of policy, because it is upon consistency of policy that they can plan. I believe that my right hon. and learned Friend has done a sound job in that area.
I should highlight the work that has gone on for the best part of four and a half years now in bringing back control over public expenditure. It is a delight to one who serves on the Public Accounts Committee to see that at least the Ministry of Defence is operating within its cash limits. That demonstrates the value of a consistent long-term policy.
This consistency of policy and the long-term strategy towards industry is bearing fruit, particularly in relation to North sea oil. As my hon. Friend the Member for Enfield, North (Mr. Eggar) said, this is a success story. It was disappointing that the right hon. Member for Leeds, South (Mr. Rees) could not bring himself to congratulate my right hon. and learned Friend on his proposals for North sea oil. Over the past two and a half years I have studied this industry in depth. Proposals have been put to the Treasury Bench in a measured way. I congratulate my right hon. and learned Friend and those who work with him on having listened because the United Kingdom Offshore Operators Association, the spokesman for the oil companies and affiliated industries, put forward seven proposals for consideration in the Budget. Of those, five have been met in full and two in part, with the result that the marginal field taxation position has been greatly eased, the oil companies' cash flow has improved and many of the anomalies of petroleum revenue tax have been removed. I understand that if representations as strong as those made on behalf of oil are made for gas, we can look forward to a favourable response.
By any yardstick, the Government's strength is that they have consistently made their policies clear and concise. I have praised the Front Bench, and it is perhaps appropriate that my hon. Friend the Economic Secretary to the Treasury is here because I am going to deal with VAT relief for charities. I address my remarks to my right hon. and learned Friend the Chancellor and to my right hon. Friend the Prime Minister. The Prime Minister will know that, long before she was elected, I supported and stood by her. I argued on her behalf on television before she was elected, so my loyalty to her can be in no doubt. However, on the issue of VAT relief for charities, she and my right hon. and learned Friend have it wrong, and the sooner they recognise that the better.
My hon. Friend the Member for Exeter (Mr. Hannam) and I have put the case clearly, but it has not yet got through to my right hon. and learned Friend. First, it was implicit in Mr. Barber's Budget, when VAT was first

introduced, that, if there were anomalies affecting charities, the House would look to put that right. Secondly, my right hon. and learned Friend has consistently said that the cost will be £100 million, although the charities say that it will be about £10 million. I do not believe that it will cost £100 million. My right hon. and learned Friend is giving £1 billion in grants to charitable bodies. Let us take £100 million off that and see who is right.
Thirdly, the Chancellor and the Attorney-General are worried about undeserving charities, such as the Moonies. I find it ironic that the two amendments in the Budget statement—one about deeds of covenant and the other about the removal of CTT—will help the Moonies far more than they will help the normal caring charities. The action taken in the Budget seems to be directed more at the uncaring charities.
Fourthly, the Chancellor said that there are too many charities. That is a slight change of tack. On 2 July 1981 I asked my right hon. and learned Friend
if he is prepared to carry out a review of the impact of value added tax on charities.
The then Economic Secretary to the Treasury said:
No. Comparatively few charities engage in commercial activities to the extent which requires them to register and account for tax and keep records of the incidence of VAT on their purchases. A review of the kind suggested would be onerous and unlikely to lead to any useful conclusions."—[Official Report, 2 July 1981; Vol. 7, c. 480.]
There were too few then and now there are too many. The Minister must get his act together on this. There are 140,000 registered charities in England and Wales.

Mr. Bruce-Gardyne: I must make it clear that charities that are trading are entitled to recover VAT on their inputs, just like any other trading body. The then Economic Secretary was pointing out to my hon. Friend that a relatively small number of charities fall into that category. The problem arises with the vast number that do not fall into that category and cannot reclaim VAT. There is no contradiction; quite the contrary.

Mr. Morris: I am advised that there is a contradiction, but I shall leave that for the moment.
The key point is that 70 per cent. of the 140,000 charities have not filed returns in the past five years. They cannot be considered to be active charities. Of the remaining 30 per cent., the vast majority have incomes of well under £17,000 a year. Indeed, about 75 per cent. of them have incomes of less than £1,000 a year. So we get down to a figure of about 10,000 to 15,000 eligible charities.
The Chancellor of the Exchequer makes great play of the administrative burden on the Customs and Excise, but the 1981 report of the Commissioners of Customs and Excise gave an administrative cost of 1·2 per cent. The Chancellor and other Treasury Ministers keep saying that the cost would be about 10 per cent. Their claim does not stand.
What worries me most is that the Chancellor fails to understand the impact of VAT on the larger charities—primarily those working for the disadvantaged in distressed areas. The Spastics Society, which has taken a welcome lead in saving the Tadworth Court hospital, calculates that the lack of relief costs it about £500,000 a year. I ask the Chancellor to think how many children could be taken out of long-stay hospitals and put into small hostels with that sort of money. The Royal National


Lifeboat Institution claims that its loss is £300,000 a year—more than enough to provide an additional lifeboat—and so it goes on.
I know that the Chancellor has given reliefs in the past four Budgets and they are most welcome, but he still fails to understand the nature, work and sources of revenue of the modern charity. Few charities have major legacy income or substantial covenants. Most rely on small donations from the public.
I have gone on at length because this is an important issue. I appeal to my right hon. Friend the Prime Minister to show some leadership to cut through this impasse, as she has done on so many other issues. Surely she, above all, recognises that the British people, giving 10p, £1 or £5 each for a good cause, do not want it to be taxed. I shall certainly do my best to ensure that it is not taxed.
Having made my complaint, I end by saying that the general Budget strategy is sound. It reinforces the Government's removal from the backs of British industry—how quickly the Opposition forget that—and the drive to denationalisation. It also gives some help to the British people. It is not an electioneering Budget; nor should it have been.
British industry is more competitive and output is increasing. For once, British industry has increased its share of world trade. The Opposition may claim that the policies ought not to work in theory, but they are beginning to work. It is time that the Opposition faced reality.

Mr. Alexander W. Lyon: I did not agree with any of the peroration of the hon. Member for Northampton, South (Mr. Morris), but I agree with what he said about relieving charities of VAT.
The official Opposition do not often agree with the SDP, but I hope that the House will pass the SDP amendment, because it is disgraceful that the Government have planned the Ways and Means resolutions on recent Budgets to ensure that no debate can take place on relieving charities of VAT. I hope that we shall have a substantial debate this year.
The Budget was eminently forgettable and most of its provisions have lost any minor impact that they had on public discussions. That has been particularly noticeable today, when most speeches have concentrated on the general economic situation and not on the Budget.
The most interesting part of the Budget was the reference to the assessment of inflation in November for the purpose of pension provisions. It was significant that the Chancellor had to admit that, even on his own forecasts, inflation will rise by at least 2 per cent. between the summer and November. That is the beginning of the turnround in inflation rates and provides the answer to the suggestion of the hon. Member for Northampton, South and most other Conservative Members that the travails of the past four years have resulted in a massive reduction in inflation.
When people look back, as they will in the general election campaign, to whether it was all worth it, they will have to ask what has been achieved by creating unemployment on the scale achieved by the Government,

by cutting back 20 per cent. of manufacturing industry and by ruining our manufacturing base. They will have to ask what is the virtue of it all.
It is clear, not only from all the speeches made in the past four years, but from the Budget, that the Chancellor believes that inflation is the sole cause of our competitiveness difficulties and our relative decline in international industry, and that the pursuit of reduced inflation is the answer to all the criticisms of the Government's economic policy. I am sceptical about accepting such a proposition.
The Red Book shows that in the middle 1970s inflation declined at the same time as world trade and the GDPs of the six major nations rose. That belies the suggestion that inflation is counter-productive to growth. Everything depends on the relative state of inflation between ourselves and our competitors. If the world as a whole were inflating and our major competitors were inflating at the same rate as we were, inflation would have a limited effect on our competitiveness. When inflation was running at well over 100 per cent. in Israel, few inhabitants felt great effects because almost everything was indexed, including incomes, benefits and prices. That offset the effect of inflation.
I accept that if we are to compete with countries such as Japan, France and Germany, which have considerably lower inflation than our own, there will be a major problem for our competitiveness. For that reason we want to do what we can to keep down inflation, but to crucify our manufacturing base and our people in an attempt to reduce inflation, not only to single figures, but to a mere speck, is a scandalous abuse of our resources.
Let us consider the effect on the individual of unemployment. It is a scandal that 500,000 people have not worked for more than two years. Some 1,500,000 people have not worked for more than a year. The Prime Minister used to say, and still occasionally falls into the trap of saying, that unemployment is often for short periods and people are in and out of employment. However, that does not necessarily mean that people have been employed for a long time. The significant contribution by the Government to unemployment over the past 20 years is that they have created the major factor of long-term unemployment.
Let us think of the effects on the lives of those who have not worked for two years or one year. The impact on their social lives is enormous. More than that, the effect will be enormous on the country. Most of those people are aged between 16 and 25. That generation has been blighted by the Government. One can only guess at what will happen in the future. We do not know what the effect of blighting a generation will be when that generation reaches the age of 30 to 40. There may be a severe reaction affecting social harmony and peace if those people have not returned to full employment or are still feeling the effects of the present rate of unemployment.
For what has that price been paid? It has been paid so that the Government could adhere to their obsession with the inflation rate. It would not be so bad if the effect of inflation was as bad in individual cases as the Government constantly pretend. They constantly say that inflation erodes savings. For most of the population savings are an illusion. For the great majority of people who are earning their living there is little room for savings. They have to depend for their daily outgoings on what, at the margin,


they can keep after the fixed costs are incurred each week. They live on that. To talk about savings for those people is nonsense.
Of course, for those who have a source of savings, the few who can live on their savings, inflation is of considerable importance, but by and large those people are at the top end of the income scale in our society. It is significant that for those people the reduction in inflation will result in an improvement in their standard of living. It is particularly significant that it does not mean an improvement in the standard of living of those at the bottom end of the scale.
A reduction in housing costs has been brought about by the reduction in the mortgage rate for those who are buying their own homes, but for people living in council houses there has been a significant increase in their cost of living because of the imposition of higher rents, which were desired by the Government and not required by the local authority. The contrast between the costs for council housing and private housing and the costs of running a motor car and travelling on public transport is significant. Work done by the Low Pay Unit shows that the people on low pay at the bottom end of the scale have not benefited from the cut in the rate of inflation. There has been a substantial increase in their cost of living. They have not benefited from the measures taken by the Government.
On the whole, the improvements such as they were have been relatively poor for those at the lower end of the scale. People on unemployment benefit have suffered a substantial fall in benefit compared with those whose incomes have increased substantially because of the cuts in the rate of income tax.
As a result of the Government's obsession with the inflation rate there has been a polarisation of the poor from the rich. A woman who came to my surgery on Saturday said that she had voted Conservative all her life. I expected her to take that view. However, now she is on supplementary benefit and is finding it difficult to live. She asked me in anguish what those concerned thought they were doing to us. Such cries are being heard all over the country. The series called "The Boys from the Blackstuff", which is about unemployment in Liverpool, reflected the public mood because so many people are suffering such deprivation. It is all over the north. It is widespread in the midlands. The problem is that it has not been felt so strongly in the south, which is the area from which the Government draw their main support.
Because of that polarisation there is a sense in public comment, in the media and elsewhere that somehow or other the country does not care. The country does care. It cares immensely. The Government will reap the whirlwind at the next election. However, if, against all the indicators, they were to win, the impact of another term of office would be so immense that the fabric of our society could not hold together.
We have paid a price that was unaskable and unpayable to reduce the rate of inflation by two or three points. When the Government leave office the rate of inflation will be only a point or so behind where it was when they took office. It is absurd that all that anguish and travail have been caused simply to do that. We should get back to a saner Government.

Mrs. Jill Knight: One has to admire the consistent ability of Opposition Members to

believe not the facts but what they wish to believe. If the hon. Member for York (Mr. Lyon) really believes what he has been saying, particularly about public opinion, he has not read a poll for the past four or five months.
It amazes me how many Opposition Members talk about unemployment in Britain as if it were solely and completely the responsibilty of the Conservative Government, who are said to be blighting the lives of the unemployed. Opposition Members never look overseas. If they did so, they would see that unemployment is just as bad there. If they believe that unemployment is the Government's fault, who did they blame when they were in office, when unemployment started to take off? We should forget about trying to heap blame for unemployment on one Government or the other. Instead, we should concentrate on the misery that unemployment brings to those who are not fortunate enough to have a job.
We are nearing the end of four days of debate on the Budget. My right hon. and learned Friend the Chancellor had a plethora of advice beforehand, and he has certainly had a torrent of words since. Not all has been congratulatory. Some newspapers have complained that the Budget was a lacklustre Budget, and others said that it was unexciting. I am far from convinced that twinkle, lustre and thrills by the minute are wise yardsticks by which to judge the efficacy of a Budget. I would far rather have what we have got—a steady, entirely honest Budget, with advantages that, although not large, were spread widely.
I welcome the changes such as help for the unemployed, invalid pensioners, widows, and one-parent families, and the raising of child benefit. I am delighted at the rise in the threshold at which tax is paid. I marvel at the Opposition, who can look at all this and say that it is a Budget only for the rich.
I appreciate the help given to industry over a wide spectrum. I shall not repeat all that has been said earlier. I very much hope that the instigation of free ports comes to fruition. My right hon. Friend the Secretary of State for Industry earlier made it plain that he well understands the problems faced by the west midlands and the real and stark difficulties faced by industries there. I hope that he will ally that to the fact that Birmingham has an airport, an excellent rail link, a first-class road service and an excellent exhibitions facility. Given all those factors, together with his knowledge of the difficulties faced by the west midlands, I very much hope that one of the free ports will be located there.
I must record my disappointment with two aspects of the Budget. First, nothing has been done to alleviate the burden of rates. I well understand that if industry is relieved of rates the money must be found elsewhere. However, I and my hon. Friends who represent the west midlands have repeatedly drawn to the Government's attention the appalling difficulties that excessive rate burdens have placed on the shoulders of west midlands industries. We have talked about the roofs coming off factories because firms simply cannot afford to pay the void rate. In this respect, we have received a large benefit from the Conservative-controlled Birmingham city council. Would that the Labour-controlled West Midlands county council had also had some consideration for industry. But no, the burden that it has heaped on west midlands industry has been increased.
Rate bills can certainly mean the collapse of a firm, which in turn means more unemployment, which


undeniably means more cost to the Government. We used to have industrial derating, and we managed perfectly well with it. The time is well past when we should have considered some form of rating help for industries in the west midlands, and I am sorry that that was not done in the budget.
My other grumble is that the Government have not taken the opportunity offered in the Budget to give positive tax incentives to those who are prepared to take responsibility for their own health care. As my right hon. Friend the Secretary of State for Social Services reminded us only last Thursday, the NHS now spends £14·5 billion of taxpayers' money annually. That is a gigantic sum by any standards.
Leaving aside the important question whether every penny or even every last £1,000 is well spent, any hon. Member could point to ways in which we could spend even more money on the Health Service to provide top grade medical care for every sick person. We could greatly improve the standard of care if the NHS had fewer sick people to look after.
It would greatly help the numbers game and reduce waiting lists if more people took out private medical insurance. The Opposition are interested only in establishing a uniform standard of health care for everyone and they do not mind if the standard is low. Like the Government, I believe that if a sizeable group of patients removed themselves from the list we should have more money to treat those who remained.
In the debate on Thursday my right hon. Friend the Secretary of State for Social Services said:
It makes no sense to ignore that extra health provision that can be provided in the private sector any more than it does to ignore the provision that can be made by voluntary organisations. It is only by partnership involving the different sectors—the public sector, the voluntary sector and the independent sector—that we can tackle the social and health problems of the 1980s."—[Official Report, 17 March 1983; Vol. 39, c. 361.]
I presume that it was that sensible conclusion that led the Government, as one of their first actions on taking office, to restore an element of tax relief to health insurance premiums paid by employers on behalf of staff earning less than £8,000 per annum. The cost of the premium is an allowable expense against corporation tax. That is fine when people are at work, but then they retire. As they get older they are more likely to need health care, but the help given to the employer on their behalf is stopped. They are less well able to afford help which they are more likely to need. Pensioners have to pay their subscriptions out of their taxed income. Surely it would be fairer to the taxpayer and far more beneficial to the NHS if we encouraged more people to take private medical insurance.
Finally, I voice my disgust at a reaction which takes the cake for illogicality and inaccuracy—the accusation that the Government are cheating the pensioners and clawing back pension money. Unless we have completely abandoned definitive English, "clawing back" means taking something away. One has a vision of a poor little pensioner trembling while a great bird with the Chancellor's face swoops down and snatches away what the pensioner has. Nothing could be further from the truth.
I resent the fact that those who are out to make political points have frightened pensioners with the idea that part of their pension is to be removed. Only last week I

received a letter on that point from a very worried constituent. Nothing is to be taken away. The increases later this year may not be so high as they were last year, but as the rate of inflation is falling that is not unreasonable. It is quite extraordinary to say that the Government are clawing back pensions when no pensioner will have anything whatever taken from him.
I give the Budget an almost wholehearted welcome. Having entered those two caveats, I wish the Chancellor well and thank him on behalf of the people of this country for all that he is doing for our future security and prosperity.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I understand that the Front Bench spokesmen wish to begin winding up this important debate at 9 o'clock. Five hon. Members are anxious to take part in the debate, so I hope that hon. Members will bear in mind the time available.

Mr. Robert Hughes: I shall certainly bear that in mind, Mr. Deputy Speaker, and watch the clock carefully. I promise not to speak beyond nine o'clock.
Budgets used to be such grand affairs, even when I came to the House in 1970. The hon. Member for Birmingham, Edgbaston (Mrs. Knight), who is now leaving, said that she did not think that sparkle was necessary in a Budget. That may be so, but there is no doubt that when I first came to the House Budget day was a great day. Members used to compete to see who could turn up in the most esoteric suit or dress and the finest and biggest hat—not all at the same time, of course, even in these enlightened times—but even that little bit of excitement has gone.
The mystique has gone out of Budget day and Budget debates, largely, I believe, because the Budget options are picked over, chewed over, examined and debated—there are almost panel games on the subject—constantly by every television channel and every branch of the media. The fact that the Budget options are so widely discussed outside the House affects the way in which we discuss the Budget here. There is almost a sense of boredom. One wonders whether the Chancellor actually set out to produce it. In addition, there are mini-Budgets between main Budgets to make so-called fine adjustments, to such an extent that people become bored to death with Budgets and with the matters that govern their lives.
The Budget should be the centrepiece of Government policy. It should show how the Government intend to proceed in the next few years. To be fair, the Chancellor says that he has been carrying out the same simple strategy from the beginning. There has been no change of course. Everything is exactly the same. But there is nothing in the Budget to stimulate business or trade to get employment moving again.
The hon. Member for Edgbaston said that she did not wish to assign blame for unemployment. Of course she does not, because she is an honourable lady, and she has left the Chamber because she is thoroughly ashamed of the disgraceful posters put up in May 1979.

Mr. Arthur Lewis: My hon. Friend should be fair, as I know that he is a fair man. The hon. Member for


Birmingham, Edgbaston (Mrs. Knight) is simply following the wonderful example of all Privy Councillors. The are all called and they all walk out afterwards and do not put in another appearance.

Mr. Hughes: I accept that mild rebuke from my hon. Friend. We seem to be getting very slack. When I first came to the House an hon. Member who left the Chamber immediately after speaking would not be called the next time he tried to catch Mr. Speaker's eye and he would be told why. I have therefore condemned myself to sitting through the speech of my right hon. Friend the Member for Leeds, East (Mr. Healey) by speaking at this stage in the debate. I hope that my right hon. Friend will not take that comment amiss.
I shall deal with the matter more widely and not confine my comments to the hon. Member for Edgbaston. Every Tory Member is thoroughly ashamed of the posters put out in May 1979. They did not even use out-of-work actors to provide the long, sinuous queue disappearing into the distance to illustrate the caption, "Labour isn't working." The Government came to power on the basis that unemployment was too high due to the Labour Government's policies and that the Conservatives would do something about it. None of us thought for a moment that they would set out to make the dole queues even longer and then turn round, after almost four years in power, and say that it was not their fault.
The Government say that the Chancellor is doing his best, the Prime Minister is doing her best, the Secretary of State for Employment is doing his best, they are all doing their best, so it must be someone else's fault and it is all outside their control. It is no wonder that we become angry when Conservative Members say that they do not wish to assign blame for unemployment. Blame can be firmly attached to the Government and their policies, because unemployment is still growing.
The city of Aberdeen, part of which I represent, is reckoned to be one of the industrial and commercial Eldorados of the country because many head offices of companies exploring North sea oil are there. Nevertheless, unemployment there is rising quickly because industries and companies are closing down almost every week, certainly every year. They are being driven out of business by events. No one says anything about it and no one seems to care because it is an oil-rich capital. The idea that some people are putting around—that one of the answers to unemployment in Aberdeen or elsewhere is free ports—is utter nonsense. I hope that the Economic Secretary to the Treasury will nod his agreement with that.
Free ports provide nothing which, apparently, is not already available elsewhere if one tackles the Inland Revenue properly. I understand that free ports are almost like bonded warehouses. Perhaps that is a poor example, as even goods in bonded warehouses are liable to tax to be paid in advance. The principle is that if goods come in to be processed and are shipped out normal tax does not apply because the goods do not go into internal circulation. I understand that at the moment a company that wants such a facility can get it from the Inland Revenue. Perhaps the Revenue is a little too stringent in its dealings with such cases. If that is so, it should be told bluntly not to be so obstreperous. The fancy idea of free ports is merely a con to make people think that they are getting something great.
My worry about free ports is that they will go further and that not only will taxation not be paid, but that normal

safety and planning regulations and other legislation, which would normally apply in factories, will disappear and we shall end up, not with free ports, but with areas in which piracy takes place. The Economic Secretary to the Treasury shakes his head. I know that that is not what he intends, but I know that there are people who want that to happen.
If one examines the Government's strategy, one sees two things. First, they are happy to see unemployment rise and, secondly, where there have been Budget changes, they have hit people on the lowest incomes and the worst off. Many hon. Members will have seen the survey carried out by the Institute of Fiscal Studies, which was published in The Sunday Times, which shows that a jobless man with a family, who used to be a local authority manual worker, receives an extra 38p a week as a result of this year's magnificent Budget. Since the Government came to power that same man has become £15·30 worse off. That means that £795 a year has been taken off him, in that two years ago he would have received the full employment benefit and earnings-related supplement which are no longer available. At the other extreme, a company director earning £44,700 a year, after four years of the present Chancellor, has gained £14,370. Yet the Chancellor has taken £800 away from an unemployed person. That is a disgrace and the Government know it.
When we become the Government—that is what will happen at the next general election—we shall be determined to look after our friends, working-class people and poor people who have been done down by the Government, in exactly the same way and with the same strength of purpose as the Government have looked after their friends. If the Prime Minister has taught me and many others in the Labour party a lesson, it is to pursue our policies with equal, if not greater, strength of purpose than she has done. I assure the Minister that we shall see a Labour Government dedicated to carrying out their policies, and as a result working people will be better off.

Mr. Michael Marshall: I agree with the hon. Member for Aberdeen, North (Mr. Hughes) that the speculation about the Budget and the sense of déjà vu present a problem. However, my right hon. and learned Friend the Chancellor was right to remind the House that, by giving information at half-yearly intervals, he gives people the opportunity to speculate with more intelligence than in the past. On balance, it is a good policy, and a movement away from the mini-Budget concept is excellent.
I appreciate what my right hon. Friend the Secretary of State for Industry said when outlining the industrial package more generally today, and I especially welcome the fact that the national insurance surcharge is moving further down the road to abolition. That is a direct benefit both to large and small industries.
More than half of the electorate in my constituency are pensioners, and I unequivocally welcome the historic uprating of pensions. I defend that with every justification. It is a much better principle, and my right hon. Friend the Member for Sidcup (Mr. Heath) was a little over-dramatic in wondering how we could argue the case for it politically. It is a better move all round.
My right hon. and learned Friend was right to be cautious in his judgment on the variables of oil prices and sterling. Another variable, about which there was not


much speculation in this Budget and which did not form the main part of the Chancellor's remarks, affects the way in which the Budget will work in practice. It involves the financial results and the management structure of nationalised industries, and their relationship with the Government. The future structure and the financial performance of the public sector are interdependent, and I am worried that much of the rethinking in that area seems to have run into the sand. The latest initiative comes from the House in the form of a Bill introduced by my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas). Although I welcome some aspects of the Bill—I am glad to see present the right hon. Member for Heywood and Royton (Mr. Barnett), who I know is actively pursuing these matters—the measure is tackling the wrong problem. The basic problem remains: what is to be done about the nationalised industries and their relationship with the Government of the day?
The present position has both direct and indirect difficulties. One direct difficulty seen from the Red Book is that of moving away from an external finance limit of between £2 billion and £2·5 billion, despite the Government's commitment to move to positive inflow when they came to office. The £500 million shortfall in capital expenditure in the public sector is highlighted in the Red Book. An indirect problem is the constant subsidy and topping up in search of viability. Although I welcome the fact that the British Steel Corporation, British Shipbuilders and British Leyland are moving on the downward path, we must remind ourselves that, in contrast, the private sector has not the same opportunity to prevent bankruptcy in that way. It is fair to say that we still suffer from a form of industrial class division.
I hope that the Chancellor will take the opportunity to give us his assessment of how he sees the changes in the relationship between Government and the nationalised industries, and those that are publicly funded, over the coming year. We are not short of analysis. We have the National Economic Development Office report of 1976, the Central Policy Review Staff report in 1981 and the Professor John Heath article about the concept of Government and conglomerates. Out of all these studies, and particularly out of the last CPRS report, I had hoped to see somewhat more progress.
It is crucial that the problem, which has been highlighted, of the appointment of chairmen and board structure should be attended to. Some progress could and should be made. The strength of the non-executive board appointments is significant, and we have not made enough progress on that. Those non-executive directors should form the basis for the selection committee which should look to management succession at the higher level generally and the appointment of the chairmen in particular. From within that quorum of non-executive directors, I should look for possible successors to the chair, and certainly to provide a chairman on an emergency basis if the need arose. That would help the Government of the day, because there is no doubt that one often faces a difficult problem when the reappointments come roaring along and a positive scrum takes place with a number of the sponsoring Departments fishing in the same pool. There is often a sense of crisis that should be avoided.
Some opportunities are still being missed in the way that chairmen appointments are made. For example, there is a worry that not enough internal promotion is being encouraged by the present circumstances. Even if it were by circulation or advertising, the chance to make it plain that there is an open opportunity for people to apply for senior posts in nationalised industries would be helpful. I have had some experience in making these appointments, both in Government and as a head hunter, and that experience suggests that often much talent is hidden in one's organisation that will come to the surface when such opportunities are provided. I do not claim that that will necessarily be the appointment that one will make, but people like to put down markers. I know that the hon. Member for Colne Valley (Mr. Wainwright) takes an interest in this and I am glad to have his support.
These are important factors in the examination of the way that boards interrelate through the chairmen to the Government of the day. We should also give attention to how chairmen could be replaced. It is reasonable for the Government of the day to engage in service contracts and proper co-operation and to seek to carry out policy on agreed lines. I hope, too, that my right hon. and learned Friend the Chancellor will say a word or two about clear financial targets and policy objectives. That was one part of the CPRS report on which there has been progress. It is ironic that it should have taken a Conservative Government to clarify much of the confusion and misdirection that applies to nationalised industries, but we all recall what happened to Lord Shinwell when he went down to try to find out about the plan for coal, so it has always been.
The Chancellor has shown great interest in the past in decentralisation and I hope that my right hon. and learned Friend will not rule out opportunities of moving in that direction, because that would not only strengthen the ways in which management development can take place but would allow a more effective growth in much of the state sector industry, and pave the way for opportunities to privatise.
It is worth repeating just one or two of the achievements that privatisation has brought about. The House knows of my interest in Cable and Wireless and British Aerospace, but the change in attitude at all levels in those companies is remarkable. If we take further opportunities to move in that direction, and to provide employee shareholding, companies will recognise, on an apolitical basis, that leaving the public sector with the PSBR and gaining access to the capital market is an attraction. On the other hand, where there is a genuine state commitment, as in the case of British Aeropspace and defence, and Cable and Wireless in relation to other Governments, these are matters that can fairly be brought to bear within the 50–50 public-private mix.
I should think that some Opposition Members would see the virtue of that depoliticisation. It is a far better balance than would be achieved by suggestions for freezing what are currently regarded as the public and private sectors. These are possibilities, I believe, that will help us to study how the public sector can become a more effective and healthy part of the British economy. I urge my right hon. and learned Friend the Chancellor, who has shown steadfastness and courage in his Budget judgment, to carry his reforms further and to look to the nationalised


industries as an area where he can make his mark. My right hon. and learned Friend will certainly not receive much help from the Opposition Benches.

9 pm

Mr. Denis Healey: Today has been an exceptionally interesting finale to the usual week of Budget debates. There have been many powerful and interesting speeches. I shall not be alone, I think, in mentioning those of my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) and the right hon. Member for Sidcup (Mr. Heath). Indeed, they displayed a broad area of agreement that has not always been so obvious in earlier years. Opposition Members appreciated particularly the lightness and wit with which the right hon. Member for Sidcup spoke, although his wit, I notice, was not so greatly appreciated by Ministers.
The House also heard a fluent and lively maiden speech from the hon. Member for Bermondsey (Mr. Hughes). I hope that there will be many more opportunities for the House to hear the hon. Gentleman in the coming weeks or months, depending on the Prime Minister.
The main interest today and, indeed, during the five days of debate has not been the Budget. The Budget sank like a lead balloon in the City, on the foreign exchange markets, on both sides of industry and, indeed, in Darlington. The interest has centred on the graveyard of the Government's economic strategy, of which the Budget is just another tombstone.
In spite of all the fiddling of the figures, which has left much uneasiness among stockbrokers, there is general agreement that the Chancellor, basically, is once more simply rearranging the deck chairs on the Titanic. The effect of his measures on the growth of national wealth in the coming year is unlikely to be more than 0·5 per cent. and some economists have estimated that it will be as low as 0·1 per cent. Yet this follows four years of Conservative Government in which national wealth has fallen by 6 per cent., unemployment has increased threefold to over 4 million and there have been record bankruptcies. The number of bankruptcies is increasing year by year. Inflation, according the Government's own figures, is set to rise again in the second half of this year. The once-for-all gain in productivity petered out a year or so ago, and, according to the Government's own projections, is now back at the normal average level of annual increase enjoyed in post-war years.
Against this background, the most startling speech in the debate was that of the Secretary of State for Industry. His departmental responsibility is for that part of our economy that has carried almost the whole burden of this experiment that failed. The right hon. Gentleman made a speech of stupefying complacency. As the late and great Ernest Bevin used to say, cliche after cliche—he pronounced the word "clitch"—tumbled out of his departmental word processor. Many of his platitudes expressed sentiments with which most hon. Members will agree. Of course, all those sentiments have been contradicted by the Government's actions.
The Secretary of State for Industry invited the House to examine what the Government had done, not what people said. He said that our prosperity depended on our capacity to supply demand. I agree. That capacity has been cut by 20 per cent. by the Government's actions over the past four years. According to the OECD, 10 per cent. of our industrial capacity has been destroyed for ever. Many

factories have gone bankrupt in the past four years and sold their machinery, often to Sweden, Germany or France. Those businesses will not be in existence when the upturn comes. In the industrial desert, those firms which still survive will have carried out almost no new investment, no industrial training and no research and development during the past four years.
The Secretary of State for Industry told the House that our greatest natural resource was our people. That was an astonishing statement from a Minister in a Government who have denied 4 million of our men and women I he right to work and made certain that those still in work have had little or no industrial training in the skills required in the new technologies of which the right hon. Gentleman spoke in such glowing terms.
My right hon. Friend the Member for Heywood and Royton (Mr. Barnett), whose cheery face enlivened my own departmental career for so many happy years, pointed to some of the constraints that would face this country when it finally embarked on recovery. There is no doubt in my mind that the most serious restraint and the most difficult to deal with will be that created by the loss of capacity, the disappearance of firms on which other firms depend for components, and the risk of overheating which could develop unless the Government are prepared to take the initiative to remove those bottlenecks.
The Secretary of State talked a great deal about this country's need to rely on the ability of small businesses to meet the strains imposed by the current recession. As I have said, he has been responsible for a record number of bankruptcies. Indeed, the number has been rising every year since the right hon. Gentleman became a member of the Government. He then had the impudence to remind us that in the west midlands small businesses must depend largely on the success of British Leyland—a shining example of public enterprise and Government subsidies. Hon. Members must examine the other large private firms in our economy.
Mr. Graham, the industrial expert of the Midland Bank, warned today that many famous names may disappear altogether in the next few weeks or months unless the Government step in to help them as they were compelled to help British Leyland. The startling nature of the Secretary of State's remarks, which I have already quoted, was nothing to what he said about our prospects for future growth. He rested his confidence on the recovery of our economy—a recovery that has been coming for 12, 24 or 36 months, according to Government spokesmen, but has not yet arrived—on the fall in the pound, the fall in interest rates and the fall in oil prices. Let hon. Members examine each of those in turn.
Opposition Members are grateful to the Secretary of State for the complete somersault that the Government have turned on the fall of sterling. Not many weeks ago the Government were telling hon. Members that we were committing a sin against the Holy Ghost by suggesting that sterling was overvalued, but in the past six months sterling has fallen by 13 per cent.—a fall that some hon. Members thought would take 12 months. Of course, that fall—as the Chancellor told us many times in those debates—is a judgment by the market on the economic fundamentals of the British economy as it is being operated by the Conservative Government. There has been a fall of 13 per cent. in sterling in under six months. That fall will help


our businesses in the longer term, although it will certainly increase the rate of inflation and produce perverse results in the short term—the famous J-curve effect.
The last time sterling fell, the Chancellor of the Exchequer intervened. He took advantage of the Prime Minister's absence in the Falkland Islands to raise interest rates in order to break sterling's fall.

Mr. Stanley Orme: Where is the Prime Minister?

Mr. Healey: I do not know. If she stays out much longer, the Chancellor of the Exchequer may raise interest rates again, and that would be terrifying for all of us.
Last time, the Chancellor raised interest rates to break sterling's fall. There was no excuse in terms of monetary policy for raising them then, because—as I pointed out in the last debate—it is only in the past few months that the Government have had the money supply under control. In the Government's first two and a half years the Prime Minister printed as much money—the great sin, she tells us—as the Labour Government printed in five years. However, the money supply is now under control. There is no domestic monetary reason for raising interest rates.
I hope that the Chancellor of the Exchequer will assure us—and the markets would like to hear him do so—that if, because of the magic of the market place and its judgments about the fundamentals of our economy, sterling should fall further in the coming weeks or months, he will not interfere in the market and that we shall not see his all-too-visible hand playing with the controls in the Bank of England. I hope that he will assure us that he will allow sterling to fall as the market wishes, and will not raise interest rates again to choke off the pallid, limping and spasmodic increase in output that the Government have told us they expect this year.
The second ground that the Secretary of State for Industry cited for confidence in recovery was the fall in interest rates. That has substantially relieved the immediate cash burden on British industry. However, interest rates have not fallen anything like as fast as the rate of inflation. Real interest rates in Britain today are higher than they were when the Chancellor raised the nominal interest rate to 17 per cent. in his first year in office. Nominal rates in Britain are still higher than those in the United States of America. Indeed, real interest rates today are not only very much higher than they ever were under the Labour Government, but are roughly three times as high as the real return on capital. Therefore, we cannot expect any investment in new capacity until interest rates have come down much further.
We shall, of course, continue to get some investment in machinery which enables firms to lay off people. We shall see some investment in labour-saving or unemployment-creating machinery, but there is no reason to expect significant investment in new capacity as long as the real rate of interest is three times as high as the real return on capital. Nor can we expect very much research and development. I notice that innovation in about three quarters of British firms takes only 1 per cent. of the value of their turnover. In other words, the amount of money spent in Britain on developing new products—which must form the basis of our recovery—has become minuscule in relation to the need.
The third factor on which the Secretary of State relied for recovery was the fall in oil prices—[Interruption.] It may be boring to Conservative Members, but they know all too well that what I say is true. Indeed, what I say proves that the whole of the Government's economic policy is based on false hopes and beliefs that have no chance of fulfilment.
This afternoon the right hon. Gentleman relied for his third element in recovery on the fall in oil prices. He said that the lower they are, the better.

Sir William Clark: rose—

Mr. Healey: I shall give way in a moment.
There has been little fall so far. Oil would have to fall to $16 a barrel to get back to where it was in 1978, before the war between Iran and Iraq when it stood, in nominal terms, at just over $13 a barrel. Since then the loss of oil supply from Iran and Iraq has been more than made up from increased supplies of oil from other parts of the world. If oil falls below $20 a barrel, all the Chancellor's calculations so far will be thrown into confusion. In his Budget speech he promised to take the necessary action to restore the PSBR to the level that he planned for it. We can expect large increases in taxation.
We know that the Secretary of State for Industry would like a big fall in oil prices to help British industry. What is the Secretary of State for Energy doing? Is he still leading for the fall in oil prices, as he did a month ago, or is he joining the OPEC cartel to break the fall in oil prices? I should not entirely blame him if he did because, as the right hon. Member for Sidcup said, a sudden and sharp fall in oil prices to below $20 could have serious consequences and lead some of the big oil-producing countries to default on their debts. But the Chancellor should tell us and the markets, on whose benevolence he now relies almost completely in his economic policy, the Government's real policy for oil prices. Will it lead them down to help British industry or will it keep them up to help British banking?
The fourth source of recovery, according to the Secretary of State, is the recovery in the United States. Here, indeed, we have seen a big change in the Government's attitude since the Chancellor made his first Budget speech on 12 June 1979 when he told us—how oddly this rings in our ears after all we have heard in recent months and years from him and the Prime Minister—that
it would be very dangerous if preoccupation with this or that world crisis—the oil crisis, the dollar crisis or whatever—led us to believe that our economic troubles could be blamed mainly on the outside world."—[Official Report, 12 June 1979; Vol. 968, c. 238.]

Mr. Patrick Jenkin: Before the right hon. Gentleman proceeds further, perhaps he will accept that I said nothing whatever about the United States in the course of my speech.

Mr. Healey: I must have heard so many echoes of earlier speeches in the debate when the right hon. Gentleman was speaking that I may have attributed to him views expressed by the Chancellor, who certainly did refer to it in his opening speech.
The Government have been telling us for the past two or three years that unemployment is the fault of the world recession—that it must be laid at the doors of other Governments who have not followed the example set by the British Government and must not be attributed to the


British Government at all. However, the plain fact is that other countries have learnt the error of our ways faster than we have. The recovery in the United States that is now expected to lead to growth of 4 or 5 per cent. this year is due to the fact that it realised the appalling error that it made in adopting what it called Thatcherism. Last summer it decided to relax control of the money supply and its fiscal stance. It has always had a much looser fiscal stance than the British Government, although its economy has been working at a higher capacity.
At the moment the Americans have adopted the first law of holes. I wish that the Government would adopt that law, too. The first law of holes is that when someone is in one he stops digging. The American Government have, thank God, stopped digging. It is still unclear what they do now that they have dropped Reaganomics, or Thatcherism as originally defined. They know that their recovery could peter out in 12 months unless they make massive cuts in the defence budget. The Administration are deeply divided over whether to ask Congress to make such cuts.
The American Government, like ours, rely too much on factors such as interest rates and the price of oil which are likely to rise once recovery is under way. The United States Administration have at least in recent months developed one insight of great value to themselves and to the world. The United States now recognise that the West as a whole must make growth the priority in economic policy—certainly no less than inflation. Secretary of State Schultz made that clear in an eloquent speech the other day. One of the reasons why the American Government have taken that view is that they know that the Western banking system is being kept together by sticking plaster and various forms of first-aid. I congratulate the Chancellor on being skilful and adroit in the application of sticking plaster, but that first-aid is not enough to save the Western banking system from collapse without substantial growth.
The magic of the market place, which the Chancellor so much admires, has produced a private banking system in the Western world which can survive only by lending more and more to bad debtors. Many Third world countries have become bad debtors because the industrial world has chosen policies of recession which prevent them from earning enough money to pay the interest or repay the principal on their loans. Unless world demand rises and they can export more at higher prices, the Western banking system is likely to collapse, whatever the IMF, the International Bank or the Bank of International Settlement may do.
The high priest of monetarism in the United States, Secretary Beryl Sprinkel, recently called for the United States, Britain, Germany and Japan—countries with low inflation rates—to lead the world to higher growth by reflating demand. The Chancellor turned that down flat in two icy sentences in his opening speech. He said:
it is sometimes suggested that countries which have made most progress against inflation should speed the recovery process by a resort to reflation. But nothing could be more dangerous to recovery."—[Official Report, 15 March 1983; Vol. 39, c. 135.]
The chanting that I hear from the Government Front Bench is the funeral dirge of the Western world's banking system.

Sir William Clark: I am sure that all right hon. and hon. Members realise that the right hon. Gentleman is

making a good political attack. Can he say where my right hon. and learned Friend's policies have failed and why, if they have failed, he has not been to the IMF cap in hand?

Mr. Healey: It is easy for a Government prepared to throw 4 million people out of work, create record bankruptcies, and cut the national wealth by 6 per cent. when we have an historic advantage of North sea oil which no other Government have had. The Chancellor has not gone to the IMF, because he has £12 billion help for the balance of payments from North sea oil alone and has received £7·5 billion this year in revenue from North sea oil. If it were not for that, he would have been grovelling to the IMF years ago,
The real problem that we all face is to increase demand worldwide, not only in Britain. The Government—the chanting on the Government Front Bench demonstrated this more clearly than any argument of mine—are trying to deny any connection between demand and output. However, sometimes the truth will out, and it is out in the Government's Red Book. Paragraph 3.37 states:
Treasury forecasts of manufacturing output have generally proved over-optimistic, to a considerable extent because the demand for manufactures in total was overstated.
In other words, those who write the Red Book know perfectly well that there is a direct connection between output and demand. However, because the Government will not act on that knowledge, they have condemned Britain to industrial decline, mass unemployment and social divisions such as we have not known for many years.
As the Secretary of State for Industry told us, the Government allowed for a small increase in demand which, in net terms, will be about £1,600 million this year. The right hon. Gentleman claimed that that meant that the Budget was expansionary. In other words, he was claiming that the increase in demand would produce expansion. Unfortunately, the increase, which is far too small, is concentrated in the areas least calculated to increase output and reduce unemployment. If the Chancellor thought that that was all the money that he had to give away, he should have concentrated it on public spending on construction and the economic infrastructure where there i5 the minimum import content, the maximum impact on jobs and the maximum stimulus to private industry. He chose instead to concentrate his stimulus overwhelmingly on cuts in income tax.

The Chief Secretary to the Treasury (Mr. Leon Brittan): Is the right hon. Gentleman in favour of indexing allowances?

Mr. Healey: I am certainly in favour of doing that. I am in favour of increasing allowances. I am also in favour of large increases in public spending, to which I have referred. I believe in a much greater stimulus to demand than that which the Government allowed themselves. There are many who feel that it will prove to be larger in any event.
This is an election year. The Government thought that there was at least one promise that they had made to the electorate that they had broken and should do something to restore. Therefore, they concentrated the stimulus on tax cuts. They did so in ways that have increased the inequality that is already dividing our society. The poor are already more highly taxed in Britain than anywhere else in Europe. Last week, in a speech of unctuous complacency, the Prime Minister said:


The Government cannot please everyone, but you can be fair to everyone.
Were the Government fair to everyone in the Budget? A business man on £45,000 a year will be £120 better off but an unemployed family will be £15 a week worse off.—[Interruption.] The detailed calculation, which appears in the document prepared by the Institute of Fiscal Studies, takes into account the increase in the prices index for those on that level of earnings and the loss of earnings-related benefit.
Since the Government took office, those on two thirds of average earnings have lost £45 a year in real terms and those with earnings over £30,000 a year have made £3,650. The poverty trap today is deeper and broader than ever before.
Worst of all, the Government have perpetrated a squalid fraud on our old age pensioners. A married couple in receipt of the retirement pension will be robbed of over £1 a week in November because the Government are basing the increased pension on the freak month of May, when for one month in the life of the Government inflation may be down to 4 per cent. before rising, on the Government's own calculation, to 6 per cent. or more.
The Government are ending as they began. As my right hon. Friend the Member for Heywood and Royton said, they are not just leaving the country poorer and the poor poorer still, but they are dividing a country which has always led the world in consensus; they have destroyed the dignity of 4 million men and women who want the right to earn their living; and they have thrown away the one chance of restructuring our industry given by North sea oil. Their economic record is one of unalloyed disaster. The Budget is the last nail in their coffin. I call upon all hon. Members to join us in the lobbies in expressing our disgust.

The Chancellor of the Exchequer (Sir Geoffrey Howe): I begin by congratulating the right hon. Member for Leeds, East (Mr. Healey) at least on the vigour of his speech. It is interesting to watch him perform beside his right hon. Friend the Leader of the Opposition, almost, one might say jostling him. One knows how important it is for the right hon. Member for Leeds, East to try once again to make his mark over the next six months. I suspect that the right hon. Gentleman has been studying with some care the remarks I made at the beginning of the debate about the extension of the job release scheme which enables men over 62 who so wish to choose to retire early and thus to make room for someone else who wants a job. I commend it to the right hon. Gentleman's attention, but I suspect that he has already commended it to the attention of his right hon. Friend the Leader of the Opposition.
I shall deal, first, with the amendment moved by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) on behalf of his party. It seeks to leave out paragraph (a) of the amendment of the law resolution. The effect of that would be to open the way to detailed, selective, amendments to VAT and make the debate on the Finance Bill unrestricted. I remind the right hon. Gentleman that the practice of restricting the scope of the resolution so as to preclude selective changes in VAT goes back to the inception of that tax. It does no more than follow the practice adopted before in respect of purchase tax and the

selective employment tax. The practice reflects the view generally accepted over the years that it is undesirable that such taxes should, during the course of the Finance Bill debates, be subject to piecemeal amendments that can affect the balance of the tax.
I remind the right hon. Member for Hillhead that when he stood in this place he moved an amendment more than once in precisely the same form restricting debate in exactly the same way, not merely in relation to purchase tax but also in relation to selective employment tax, the import deposit scheme and the betterment levy. The resolution is founded on a sensible precedent. I commend the resolution rather than the amendment to the House.
I want to deal with the point raised by the right hon. Member for Leeds, East, the right hon. Member for Hillhead and my right hon. Friend the Member for Sidcup (Mr. Heath). They suggested that there is some doubt about the method by which I have settled for the year ahead on a PSBR of £8 billion, in particular, by an undue reduction of the contingency reserve or an unjustified increase in the allowance for shortfall.
The contingency reserve for 1982–83 was set at £2·4 billion; for 1983–84 it has been reduced to £1·5 billion. There is a simple reason for that. The year 1982–83 was the first year of cash planning and it was sensible and necessary to be cautious in setting the contingency reserve for that year. As things turned out, although the reserve was set at £2·4 billion, there were fewer claims on it than expected and, even after including the costs of the Falklands campaign, only £1·4 billion has been required.
No doubt falling inflation was part of the reason for that. For 1983–84, the Chief Secretary and I took the view that we could safely operate with a smaller reserve, of about that size. As a matter of record, the decision to fix the reserve at about £1½ billion was taken provisionally in the autumn and that figure, which comes as such a surprise to some people today, appeared in the autumn statement. Nothing has happended to alter our view, so that figure is retained in the Red Book.
The other suggestion is that we have mysteriously invented a new quantity called "shortfall" and have used it suddenly to reduce the PSBR. That suggestion also has no foundation. All Chancellors have to take a view at Budget time about the extent to which there may be underspending within the plans, and in seven of the past nine public expenditure White Papers there has been a general allowance for shortfall in one form or another. The same is true of the financial statement and Budget Report this year. It shows that the total shortfall for the current year, compared with the plans announced in the 1982 budget, is likely to be £2·2 billion. For 1983–84, the allowance is about £1 billion less.
There is always likely to be some shortfall as spending managers try to keep within their cash limits. In addition, it may take time for our measures aimed at reducing capital underspending by local authorities and nationalised industries to have their full effect. I am satisfied that the allowances both for shortfall and contingencies are justified.
I start my reply to the substance of the debate by joining the right hon. Member for Leeds, East in congratulating the hon. Member for Bermondsey (Mr. Hughes) on a combative, yet courteous, maiden speech in which he spoke effectively on behalf of his constituents. I gladly endorse the hon. Gentleman's tribute to his predecessor, who gave many years' distinguished service in the House


and continues to serve the people of docklands on the London Docklands Development Corporation. The hon. Gentleman's speech brought the House face to face with the impact of unemployment in his constituency. The general topic has rightly recurred, not just in this debate but in many other recent debates in the House.
The right hon. Member for Cardiff, South-East (Mr. Callaghan) gave examples of the impact of unemployment in his native south Wales and the city of Cardiff. You, Mr. Speaker, and I have undimmed memories of the impact of unemployment on that part of the country. as had the late Alec Jones, whose recent death saddened the whole House. He was a distinguished and characteristic representative of the Welsh Labour movement and the whole House misses him greatly.
In our different ways, all of us remember the human and moral impact of unemployment. I remember it from my childhood in circumstances that were not explosive, and I also remember how easy it is to overlook the human impact of unemployment. When I left south Wales for the first time and went to the south of England, I met people who said that they had never understood the problem of unemployment and what it really meant. Because I represent Surrey, East, I bear that in mind. I understand the problem of unemployment as does every hon. Member. We do not forget.
Among the reminiscences—I use that word without disrespect—that the House has heard today, we have been reminded of the different nature of the current unemployment problem facing not just this country but the world.
The right hon. Member for Cardiff, South-East spoke of unemployment in the 1930s. The right hon. Member for Leeds, South (Mr. Rees), in a distinguished and thoughtful speech on the same subject, referred to the lessons that might be learnt from the 1944 White Paper. However, those lessons derive from a time that was different from today, when prices were falling and when, as the right hon. Member for Cardiff, South-East reminded us, there was a true deflation taking place when prices were falling. That was in the 1930s.
I shall come forward to the 1960s and 1970s, when I had the privilege to serve in the Government of my right hon. Friend the Member for Sidcup, and when we were both facing what seemed to be a shocking level of unemployment. At that time, before the oil shock, when the right hon. Member for Cardiff, South-East also grappled with the problem as Chancellor and as Prime Minister, it was still legitimate and natural to strive, as the right hon. Gentleman said he did, for the four prizes together—balance of payments stability, real growth, full employment and stable prices. In those days we talked about stability of prices and meant one per cent., two per cent. or three per cent. We were grappling with circumstances that were quite different from those that we face today.
Today, all that has changed. As the right hon. Member for Leeds, South said, technological change is massive. It creates problems, but it creates opportunities as well. The oil upheavals have disturbed the whole world. Inflation worldwide has reached terrifying levels. The problem truly is worldwide. That is why in so many contributions not just today but throughout the debate hon. Members have reminded the House of the international setting of our considerations. I have read and noted the many contributions made by hon. Members on both sides of the

House on previous days. I listened to the speeches made by my right hon. Friend the Member for Sidcup and the right hon. Member for Hillhead. All that has been very much in my mind during the past 48 hours, which I have spent in Brussels. [HON. MEMBERS:"Where is the Prime Minister?"] The Prime Minister is now at the European Council. That is why she is not in the House now.
During that time one could not fail to be conscious of the impact on all one's colleagues, the Finance Ministers in the European Community, of unemployment in their countries. We met in Brussels. In Belgium the unemployment level is a little higher than our own. It was against that background that we met for that protracted meeting, when I was glad to be able to play some part in helping to find an agreement on the future of the European monetary system.

Mr. Shore: The right hon. and learned Gentleman referred to the traditional four prizes of post-war economic policy. Are we correct to infer from what he said that one of those four prizes has now been abandoned by the Government, for the reasons that he has stated, and that the one prize that has been dropped is full employment?

Sir Geoffrey Howe: The right hon. Gentleman's question does not do credit to his normal balance in these matters. Of course, that prize has not been dropped. It must be manifest to the right hon. Gentleman that for any Government in today's circumstances to capture all four prizes is a formidable task. His Government failed to achieve full employment. His Government failed to achieve success against inflation. I should have thought that this was a matter of common ground. I come back to the fact that the work that was done in Brussels this weekend demonstrates the need—and there is something to fulfil it—for greater convergence of the economic policies of industrialised countries. That need and the policy consequences that flow from it are as fully recognised in Paris as in the other capitals in the European Community. In their present policies all the European Governments share our concern about unemployment. They share the consensus with the United States as well as ourselves that, if we are to achieve success against unemployment, we must follow prudent monetary policies and curtail the size of borrowing that threatens those monetary policies, which provides the key to lower inflation and to lower real interest rates in due course, leading to more investment and so more jobs.
I shall return to the Labour party's policies. It is worth noting that its prescriptions are out of line with that international consensus. There is not a Government of any political complexion in western Europe or north America who are trying to spend or borrow their way out of recession. There was an interesting contrast between what the right hon. Member for Leeds, East said about the United States and what the right hon. Member for Cardiff, South-East said. The right hon. Member for Cardiff, South-East rightly identified as one of the four or five hazards that he spoke of to the future of world economic growth the size of the United States' federal deficit.

Mr. Healey: I have had the chance of discussing this with Mr. Feldstein and Mr. Volcker in the last week—[HON. MEMBERS: "Name dropper".] The plain fact is that the United States Administration is running a deficit which, as a percentage of GDP, is very much higher than ours, and no one in the United States thinks it necessary


to cut it. They are worrying about how the deficit will increase in the following years unless they either cut spending or raise taxes. That is what the argument is about. They have relaxed monetary and fiscal policy to a level which the British Government have never attempted, and that is why they now expect higher growth than they did a few months ago.

Sir Geoffrey Howe: I dare say that I could drop the names of some people with whom I have discussed the United States economy. I dare say that I can, and shall, answer the right hon. Gentleman's argument. If there is one fear more dominant than any other affecting the prospects for United States recovery—it is manifested by the tendency of interest rates to rise and the difficulty of getting them to fall—it is that the United States federal deficit will remain on too high a path and that insufficient action is being taken to get it down.
In fact, in other respects the international community been taking a number of steps that are necessary to put itself in a more secure condition. First, major rescue operations have been undertaken for countries in difficulty. Secondly, those operations have been accompanied by adjustment programmes worked out by the International Monetary Fund. Thirdly, a major new development is that the fund has mobilised effective contacts with the commercial banks. Fourthly, the international community has managed to reach agreement on a substantial replenishment of the fund's resources, so that the funds available to help with the international adjustment process have been substantially increased.
A number of hon. Members also asked whether more could be done in response to the call for a new Bretton Woods to achieve greater international stability in exchange rates. I wish the House to be in no doubt about the importance that I attach to that objective. When one rejects the call for a new Bretton Woods, it is because a common feature of such calls—even highly placed people succumb to this—is that people make them for their own sakes, but the role of the institutions of which they dream and the objectives of the conference for which they call are left undefined.
Through the steps that can sensibly be taken, we are seeking to secure greater convergence between the economic policy performance of different countries, and by that and other means to achieve greater success in bringing interest rate volatility to a lower level. That is, of course, important, and we shall continue the work.
At home as well as abroad, lower inflation will in the end pave the way to more jobs. That has been commended by Conservative Members many times. My hon. Friend the Member for Croydon, South (Sir W. Clark) commended it clearly, and that is the answer to his worries about the role played by indexed debt.
This is not just a matter of theory, because this has already begun to happen. Last year, domestic demand grew by 2½ per cent. to 3 per cent. The prospects for the growth of real demand in the year ahead are even better. Critics sometimes fail to see the answer to their own charge. I noticed that my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour)—and he is not alone—urged me to increase demand but at the same time denounced me for having launched a consumer boom. This is not a serious proposition. I give just one clear

example of the way in which real demand is expanding. In January this year, we had the highest ever figure in any January for the sale of motor cars. For the rest of this year, we have a forecast for the second highest ever demand for motor cars, and the highest since 1979. Why is that happening?

Mr. Healey: Hire purchase.

Sir Geoffrey Howe: I am grateful to the right hon. Gentleman for being such an adept examinee. One of the reasons for such a high level is that, among the many other regulations that we have swept away, we were glad last summer to sweep away the hire purchase regulations.
The substantive reason is that inflation is falling. Consumer confidence is rising. The consumer sees less need to save to repair the ravages of rising prices. The result is that consumer spending was rising by 3 per cent. in real terms at the end of last year, and is likely to continue buoyant in the year ahead.
It is now up to British industry to translate that higher demand into higher output and more jobs. That, too, is happening. In the first two months of 1983 import penetration was lower than in the average month last year, and it is likely to fall further in the year ahead. In the three months to February, car production—let alone car sales—was 8·5 per cent. greater than in the previous three months. British industry is in a better condition to meet the rising demand—once again because of lower inflation and lower interest rates. Each 1 per cent. fall in interest rates boosts company cash flow by £300 million in a full year.
Lower inflation is helping to keep down other costs as well. It has helped to bring common sense back to pay bargaining. Pay settlements are now running at more than 10 per cent. below their level of three years ago. People are beginning to understand that the only way to secure rising living standards and more jobs is to secure an improvement in competitiveness.
There are plainer examples. Many people are concerned about the construction industry. In the last quarter of last year, output in that industry was up by 6 per cent. on a year earlier. Private housing is up by 33 per cent. on a year ago, with more than 13 per cent. more housing starts. According to the building and civil engineering EDC, housing investment in the year ahead is likely to rise by up to 17 per cent.
That is happening not because we have given an artificial boost to demand but because inflation and interest rates have fallen. The 5 per cent. fall in the mortgage interest rate since November 1981 is the equivalent of a pay rise of about 10 per cent. to the average mortgagor. More houses are being bought and more houses are being built. Demand is increasing because inflation is falling. In the same way, lower inflation has allowed us to reduce the cash plans for public spending—meaning lower taxes—and still leave room for a real increase in what those plans will buy.
For all those reasons, falling inflation is bringing and will bring more output and more jobs. That is why confidence is improving, why industrial profits are improving, and why overall investment rose last year by 3 per cent. and is expected to rise by more this year. To those who ask for more demand, I say that the best assurance of rising real demand and real output is lower inflation. That is the only safe assurance that we shall see more jobs.

Mr. Shore: There is an important point to be made about the relationship between the falling rate of inflation and the increase in demand. The right hon. and learned Gentleman has just quoted some figures connected with house building, which he says has risen by 17 per cent. because of the fall in inflation. Four or five years ago, when the rate of inflation was higher, was not the rate of private and public house building very much higher than it is now or will be after the increase of 17 per cent.?

Sir Geoffrey Howe: That is not the point. Those conditions, accompanied by the inflationary conditions which followed, led to the problems from which we are now emerging. Time and again, this country and others have sought to remedy the situation by reflation, but reflation has become inflation and has led to more unemployment.
That is not the only way in which we can improve the prospects for industry. We have improved them as well by the immense progress that we have made in cutting the tax on jobs imposed by the Labour party.
Since we came to office, the burden of national insurance contributions and surcharge has been reduced from 13·5 per cent. to 11·5 per cent. The national insurance surcharge—the tax on jobs specially invented by the right hon. Member for Leeds, East—has been cut by 3·5 per cent. to 1 per cent. and the burden on private sector employers reduced by no less than £2 billion as a result. That compares with the record of the Labour Government who introduced the surcharge in April 1977 and 18 months later increased it to 3·5 per cent. from October 1978. That is not all. When they came to office the combined burden of the national insurance contribution and national insurance surcharge was 8·5 per cent. By the time they left office it was 13·5 per cent. They increased the tax burden on business by no less than £4 billion at today's prices and raised the job tax burden on employers by 5 per cent. We have reduced it by 2 per cent. That is the right kind of progress to achieve success in getting unemployment to come down.
We have taken steps to carry forward the Government's strategy in a number of other ways. The Budget carries forward the strategy for recovery that we have persistently pursued in the past four years. That is in sharp contrast with the proposals put forward by the Opposition. Proposals have been suggested by representatives of the alliance, but it is difficult to know where they stand on the need for pay restraint or an incomes policy, as they would describe it. Such a policy featured prominently in many of their proposals in the past, but they are now singularly diffident about suggesting it.
There is an even more remarkable inconsistency about the size of the alliance's so-called reflationary packages. Not so long ago, near the time of its birth, all the talk from the alliance was of sober, moderate reflation. Last September alliance Members were talking about a package with a £3·25 billion cost to the PSBR in its third year. By January this year the net cost of their proposals was down to £3 billion or £4 billion per year over two years. Their latest proposal is presented as an increase of £3 billion in the year ahead, but that is not the half of it. Taking into account the cost of their programme in a full year, the figure is more than double that.
The right hon. Member for Hillhead has some experience of making Budgets. I do not know how much he had to do with the latest alliance proposals, but I note that the Financial Times referred to them as
sad work for a former Chancellor".
It is very difficult to detect the authentic voice of the so-called alliance. The voter who says, "Take me to your leader" is faced with the curious job-splitting arrangement between the right hon. Member for Hillhead and the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). It is no wonder that people find it difficult to know what the alliance really wants. Unless and until it can bring itself to make the truly agonising choice between the two kilted heroes, it will remain impossible for the voter to know who is the true king over the water—the young pretender from Roxburgh or the old pretender from Hillhead. Either way, we shall be glad to recognise one or other of them as a more worthy and effective Leader of the Opposition than the leader of the Labour party.
The right hon. Member for Stepney and Poplar (Mr. Shore) has been consistent by contrast with his colleagues. He has been consistent in calling for massive boosts in reflationary spending, massive increases in borrowing, massive printing of money and deliberate devaluation as a source of growth. He has been equally consistent, however, in his failure to learn from the experience of other countries or indeed from his own experience. Moreover, he has consistently taken a line entirely inconsistent with that propounded and practised by his right hon. Friend the Member for Leeds, East in the last three years of the Labour Government. He has also taken a line entirely inconsistent with the views now being commended to the people of France who, after less than two years of a Socialist Government, are being advised to reduce inflation, reduce interest rates, reduce money growth, reduce the deficit, raise taxes and cut spending. That is what lies at the end of the road that we shall take if the Labour party ever comes into office. It is a measure of the folly that would follow a Budget that was introduced by the right hon. Member for Stepney and Poplar. I invite the House to reject any such proposition and I commend my own Budget to the House.

Question put, That the amendment be made:—

The House divided: Ayes 226, Noes 297.

Division No. 93]
[10 pm


AYES


Abse, Leo
Cant, R. B.


Allaun, Frank
Carmichael, Neil


Alton, David
Carter-Jones, Lewis


Anderson, Donald
Cartwright, John


Archer, Rt Hon Peter
Clark, Dr David (S Shields)


Ashley, Rt Hon Jack
Clarke,Thomas(C'b'dge, A'rie)


Ashton, Joe
Cocks, Rt Hon M. (B'stol S)


Atkinson, N.(H'gey,)
Cohen, Stanley


Barnett, Guy (Greenwich)
Coleman, Donald


Barnett, Rt Hon Joel (H'wd)
Concannon, Rt Hon J. D.


Benn, Rt Hon Tony
Cook, Robin F.


Bennett, Andrew(St'kp't N)
Craigen, J. M. (G'gow, M'hill)


Bidwell, Sydney
Crawshaw, Richard


Booth, Rt Hon Albert
Crowther, Stan


Bottomley, Rt Hon A.(M'b'ro)
Cryer, Bob


Bray, Dr Jeremy
Cunliffe, Lawrence


Brown, Hugh D. (Proven)
Cunningham, G. (Islington S)


Brown, Ronald W. (H'ckn'y S)
Dalyell, Tam


Brown, Ron (E'burgh, Leith)
Davidson, Arthur


Buchan, Norman
Davis, Clinton (Hackney C)


Callaghan, Rt Hon J.
Davis, Terry (B'ham, Stechf'd)


Campbell, Ian
Deakins, Eric


Campbell-Savours, Dale
Dean, Joseph (Leeds West)


Canavan, Dennis
Dewar, Donald






Dobson, Frank
Marshall, Dr Edmund (Goole)


Dormand, Jack
Martin, M (G'gow S'burn)


Douglas, Dick
Mason, Rt Hon Roy


Dubs, Alfred
Maxton, John


Duffy, A. E. P.
Maynard, Miss Joan


Dunwoody, Hon Mrs G.
Meacher, Michael


Eadie, Alex
Mikardo, Ian


Eastham, Ken
Millan, Rt Hon Bruce


Ellis, R. (NE D'bysh're)
Mitchell, Austin (Grimsby)


Ellis, Tom (Wrexham)
Mitchell, R. C. (Soton Itchen)


English, Michael
Morris, Rt Hon A. (W'shawe)


Ennals, Rt Hon David
Morris, Rt Hon C. (O'shaw)


Evans, Ioan (Aberdare)
Morton, George


Evans, John (Newton)
Moyle, Rt Hon Roland


Faulds, Andrew
Newens, Stanley


Field, Frank
Oakes, Rt Hon Gordon


Flannery, Martin
Ogden, Eric


Foot, Rt Hon Michael
O'Halloran, Michael


Ford, Ben
O'Neill, Martin


Forrester, John
Orme, Rt Hon Stanley


Foulkes, George
Owen, Rt Hon Dr David


Fraser, J. (Lamb'th, N'w'd)
Paisley, Rev Ian


Freeson, Rt Hon Reginald
Palmer, Arthur


Freud, Clement
Park, George


Garrett, John (Norwich S)
Parker, John


George, Bruce
Parry, Robert


Gilbert, Rt Hon Dr John
Pavitt, Laurie


Golding, John
Pendry, Tom


Grant, John (Islington C)
Pitt, William Henry


Grimond, Rt Hon J.
Powell, Rt Hon J.E. (S Down)


Hamilton, James (Bothwell)
Powell, Raymond (Ogmore)


Hamilton, W. W. (C'tral Fife)
Prescott, John


Harrison, Rt Hon Walter
Price, C. (Lewisham W)


Haynes, Frank
Race, Reg


Healey, Rt Hon Denis
Radice, Giles


Heffer, Eric S.
Rees, Rt Hon M (Leeds S)


Hogg, N. (E Dunb't'nshire)
Richardson, Jo


Holland, S. (L'b'th, Vauxh'll)
Roberts, Albert (Normanton)


Home Robertson, John
Roberts, Allan (Bootle)


Horam, John
Roberts, Ernest (Hackney N)


Howells, Geraint
Roberts, Gwilym (Cannock)


Hoyle, Douglas
Robinson, G. (Coventry NW)


Huckfield, Les
Rooker, J. W.


Hudson Davies, Gwilym E.
Ross, Ernest (Dundee West)


Hughes, Robert (Aberdeen N)
Ross, Stephen (Isle of Wight)


Hughes, Roy (Newport)
Rowlands, Ted


Hughes, Simon (Bermondsey)
Ryman, John


Janner, Hon Greville
Sandelson, Neville


Jay, Rt Hon Douglas
Sever, John


Jenkins, Rt Hon Roy (Hillh'd)
Sheldon, Rt Hon R.


John, Brynmor
Shore, Rt Hon Peter


Johnson, James (Hull West)
Short, Mrs Renée


Johnson, Walter (Derby S)
Silkin, Rt Hon J. (Deptford)


Jones, Barry (East Flint)
Silkin, Rt Hon S, C. (Dulwich)


Jones, Dan (Burnley)
Silverman, Julius


Kerr, Russell
Skinner, Dennis


Kilroy-Silk, Robert
Smith, Cyril (Rochdale)


Lambie, David
Smith, Rt Hon J. (N Lanark)


Lamond, James
Snape, Peter


Leadbitter, Ted
Soley, Clive


Leighton, Ronald
Spearing, Nigel


Lestor, Miss Joan
Spellar, John Francis (B'ham)


Lewis, Arthur (N'ham NW)
Spriggs, Leslie


Lewis, Ron (Carlisle)
Stallard, A. W.


Litherland, Robert
Steel, Rt Hon David


Lofthouse, Geoffrey
Stoddart, David


Lyon, Alexander (York)
Stott, Roger


Lyons, Edward (Bradf'd W)
Straw, Jack


McDonald, Dr Oonagh
Summerskill, Hon Dr Shirley


McElhone, Mrs Helen
Thomas, Jeffrey (Abertillery)


McGuire, Michael (Ince)
Thomas, Mike (Newcastle E)


McKay, Allen (Penistone)
Thomas, Dr R.(Carmarthen)


McKelvey, William
Tilley, John


MacKenzie, Rt Hon Gregor
Torney, Tom


Maclennan, Robert
Varley, Rt Hon Eric G.


McMahon, Andrew
Wainwright, E.(Dearne V)


McNamara, Kevin
Wainwright, R.(Colne V)


McTaggart, Robert
Walker, Rt Hon H.(D'caster)


Magee, Bryan
Wardell, Gareth


Marshall, (G'gow S'ton)
Watkins, David





Weetch, Ken
Wilson, William (C'try SE)


Welsh, Michael
Winnick, David


White, Frank R.
Woodall, Alec


White, J. (G'gow Pollok)
Woolmer, Kenneth


Whitehead, Phillip
Wrigglesworth, Ian


Whitlock, William
Wright, Sheila


Wigley, Dafydd
Young, David (Bolton E)


Willey, Rt Hon Frederick



Williams, Rt Hon A.(S'sea W)
Tellers for the Ayes:


Wilson, Gordon (Dundee E)
Mr. John Roper and


Wilson, Rt Hon Sir H.(H'ton)
Mr. A. J. Beith.


NOES


Aitken, Jonathan
du Cann, Rt Hon Edward


Alexander, Richard
Dunn, Robert (Dartford)


Alison, Rt Hon Michael
Durant, Tony


Amery, Rt Hon Julian
Dykes, Hugh


Ancram, Michael
Eden, Rt Hon Sir John


Arnold, Tom
Edwards, Rt Hon N. (P'broke)


Aspinwall, Jack
Eggar, Tim


Atkins, Rt Hon H.(S'thorne)
Emery, Sir Peter


Atkins, Robert(Preston N)
Eyre, Reginald


Baker, Kenneth(St.M'bone)
Fairbairn, Nicholas


Baker, Nicholas (N Dorset)
Fairgrieve, Sir Russell


Banks, Robert
Faith, Mrs Sheila


Beaumont-Dark, Anthony
Farr, John


Bendall, Vivian
Fenner, Mrs Peggy


Benyon, Thomas (A'don)
Finsberg, Geoffrey


Benyon, W. (Buckingham)
Fisher, Sir Nigel


Berry, Hon Anthony
Fletcher, A. (Ed'nb'gh N)


Best, Keith
Fletcher-Cooke, Sir Charles


Bevan, David Gilroy
Fookes, Miss Janet


Biffen, Rt Hon John
Forman, Nigel


Biggs-Davison, Sir John
Fowler, Rt Hon Norman


Blackburn, John
Fraser, Rt Hon Sir Hugh


Blaker, Peter
Fraser, Peter (South Angus)


Body, Richard
Fry, Peter


Bonsor, Sir Nicholas
Gardiner, George (Reigate)


Bottomley, Peter (W'wich W)
Gardner, Sir Edward


Bowden, Andrew
Garel-Jones, Tristan


Boyson, Dr Rhodes
Gilmour, Rt Hon Sir Ian


Braine, Sir Bernard
Glyn, Dr Alan


Bright, Graham
Goodhart, Sir Philip


Brinton, Tim
Gorst, John


Britten, Rt. Hon. Leon
Gow, Ian


Brooke, Hon Peter
Gower, Sir Raymond


Brotherton, Michael
Gray, Rt Hon Hamish


Brown, Michael(Brigg &amp; Sc'n)
Greenway, Harry


Browne, John (Winchester)
Griffiths, E.(B'y St. Edm'ds)


Bruce-Gardyne, John
Griffiths, Peter (Portsm'th N)


Bryan, Sir Paul
Grist, Ian


Buchanan-Smith, Rt. Hon. A.
Grylls, Michael


Buck, Antony
Gummer, John Selwyn


Budgen, Nick
Hamilton, Hon A.


Burden, Sir Frederick
Hamilton, Michael (Salisbury)


Butcher, John
Hannam, John


Butler, Hon Adam
Haselhurst, Alan


Carlisle, John (Luton West)
Hastings, Stephen


Carlisle, Kenneth (Lincoln)
Havers, Rt Hon Sir Michael


Carlisle, Rt Hon M. (R'c'n)
Hawkins, Sir Paul


Chalker, Mrs. Lynda
Hawksley, Warren


Channon, Rt. Hon. Paul
Hayhoe, Barney


Chapman, Sydney
Heath, Rt Hon Edward


Churchill, W. S.
Heddle, John


Clark, Hon A. (Plym'th, S'n)
Henderson, Barry


Clark, Sir W. (Croydon S)
Hicks, Robert


Clarke, Kenneth (Rushcliffe)
Higgins, Rt Hon Terence L.


Clegg, Sir Walter
Hogg, Hon Douglas (Gr'th'm)


Cockeram, Eric
Holland, Philip (Carlton)


Colvin, Michael
Hooson, Tom


Cormack, Patrick
Hordern, Peter


Corrie, John
Howe, Rt Hon Sir Geoffrey


Costain, Sir Albert
Howell, Rt Hon D. (G'ldf'd)


Cranborne, Viscount
Howell, Ralph (N Norfolk)


Critchley, Julian
Hunt, David (Wirral)


Crouch, David
Hunt, John (Ravensbourne)


Dickens, Geoffrey
Hurd, Rt Hon Douglas


Dorrell, Stephen
Irvine, Rt Hon Bryant Godman


Douglas-Hamilton, Lord J.
Irving, Charles (Cheltenham)


Dover, Denshore
Jenkin, Rt Hon Patrick






Johnson Smith, Sir Geoffrey
Porter, Barry


Jopling, Rt Hon Michael
Prentice, Rt Hon Reg


Joseph, Rt Hon Sir Keith
Price, Sir David (Eastleigh)


Kaberry, Sir Donald
Prior, Rt Hon James


Kellett-Bowman, Mrs Elaine
Proctor, K. Harvey


Kimball, Sir Marcus
Raison, Rt Hon Timothy


King, Rt Hon Tom
Rathbone, Tim


Kitson, Sir Timothy
Rees-Davies, W. R.


Knight, Mrs Jill
Renton, Tim


Knox, David
Rhodes James, Robert


Lang, Ian
Rhys Williams, Sir Brandon


Langford-Holt, Sir John
Ridley, Hon Nicholas


Latham, Michael
Ridsdale, Sir Julian


Lawrence, Ivan
Rifkind, Malcolm


Lawson, Rt Hon Nigel
Rippon, Rt Hon Geoffrey


Lee, John
Roberts, Wyn (Conway)


Le Marchant, Spencer
Rossi, Hugh


Lennox-Boyd, Hon Mark
Rost, Peter


Lester, Jim (Beeston)
Royle, Sir Anthony


Lewis, Sir Kenneth (Rutland)
Rumbold, Mrs A. C. R.


Lloyd, Ian (Havant &amp; W'loo)
Sainsbury, Hon Timothy


Loveridge, John
St. John-Stevas, Rt Hon N.


Luce, Richard
Scott, Nicholas


Lyell, Nicholas
Shaw, Giles (Pudsey)


McCrindle, Robert
Shaw, Sir Michael (Scarb')


Macfarlane, Neil
Shelton, William (Streatham)


MacGregor, John
Shepherd, Colin (Hereford)


MacKay, John (Argyll)
Shepherd, Richard


Macmillan, Rt Hon M.
Silvester, Fred


McNair-Wilson, M. (N'bury)
Sims, Roger


McNair-Wilson, P. (New F'st)
Skeet, T. H. H.


McQuarrie, Albert
Smith, Tim (Beaconsfield)


Madel, David
Speed, Keith


Major, John
Speller, Tony


Marland, Paul
Spence, John


Marlow, Antony
Spicer, Michael (S Worcs)


Marshall, Michael (Arundel)
Sproat, Iain


Marten, Rt Hon Neil
Squire, Robin


Mates, Michael
Stainton, Keith


Maude, Rt Hon Sir Angus
Stanbrook, Ivor


Mawby, Ray
Stanley, John


Maxwell-Hyslop, Robin
Steen, Anthony


Mayhew, Patrick
Stevens, Martin


Mellor, David
Stewart, A.(E Renfrewshire)


Meyer, Sir Anthony
Stewart, Ian (Hitchin)


Miller, Hal (B'grove)
Stokes, John


Mills, Iain (Meriden)
Stradling Thomas, J.


Mills, Sir Peter (West Devon)
Tapsell, Peter


Miscampbell, Norman
Taylor, Teddy (S'end E)


Moate, Roger
Tebbit, Rt Hon Norman


Monro, Sir Hector
Temple-Morris, Peter


Montgomery, Fergus
Thomas, Rt Hon Peter


Moore, John
Thompson, Donald


Morgan, Geraint
Thorne, Neil (Ilford South)


Morris, M. (N'hampton S)
Thornton, Malcolm


Morrison, Hon C. (Devizes)
Townend, John (Bridlington)


Morrison, Hon P, (Chester)
Townsend, Cyril D, (B'heath)


Mudd, David
van Straubenzee, Sir W.


Murphy, Christopher
Vaughan, Dr Gerard


Myles, David
Viggers, Peter


Neale, Gerrard
Waddington, David


Needham, Richard
Wakeham, John


Nelson, Anthony
Waldegrave, Hon William


Neubert, Michael
Walker, Rt Hon P.(W'cester)


Newton, Tony
Walker, B. (Perth)


Normanton, Tom
Walker-Smith, Rt Hon Sir D.


Nott, Rt Hon Sir John
Wall, Sir Patrick


Onslow, Cranley
Waller, Gary


Oppenheim, Rt Hon Mrs S.
Walters, Dennis


Page, John (Harrow, West)
Ward, John


Page, Richard (SW Herts)
Warren, Kenneth


Parkinson, Rt Hon Cecil
Watson, John


Parris, Matthew
Wells, Bowen


Patten, Christopher (Bath)
Wells, John (Maidstone)


Patten, John (Oxford)
Wheeler, John


Pattie, Geoffrey
Whitney, Raymond


Pawsey, James
Wickenden, Keith


Peyton, Rt Hon John
Wiggin, Jerry


Pink, R. Bonner
Williams, D.(Montgomery)


Pollock, Alexander
Winterton, Nicholas





Wolfson, Mark
Tellers for the Noes:


Young, Sir George (Acton)
Mr. John Cope and


Younger, Rt Hon George
Mr. Alastair Goodlad.

Question accordingly negatived.

Main Question put:

The House divided: Ayes 297, Noes 225.

Division No. 94]
[10.13 pm


AYES


Aitken, Jonathan
Durant, Tony


Alexander, Richard
Dykes, Hugh


Alison, Rt Hon Michael
Eden, Rt Hon Sir John


Amery, Rt Hon Julian
Edwards, Rt Hon N. (P'broke)


Ancram, Michael
Eggar, Tim


Arnold, Tom
Emery, Sir Peter


Aspinwall, Jack
Eyre, Reginald


Atkins, Rt Hon H.(S'thorne)
Fairbairn, Nicholas


Atkins, Robert(Preston N)
Fairgrieve, Sir Russell


Baker, Kenneth(St.M'bone)
Faith, Mrs Sheila


Baker, Nicholas (N Dorset)
Farr, John


Banks, Robert
Fenner, Mrs Peggy


Beaumont-Dark, Anthony
Finsberg, Geoffrey


Bendall, Vivian
Fisher, Sir Nigel


Benyon, Thomas (A'don)
Fletcher, A. (Ed'nb'gh N)


Benyon, W. (Buckingham)
Fletcher-Cooke, Sir Charles


Berry, Hon Anthony
Fookes, Miss Janet


Best, Keith
Forman, Nigel


Bevan, David Gilroy
Fowler, Rt Hon Norman


Biffen, Rt Hon John
Fraser, Rt Hon Sir Hugh


Biggs-Davison, Sir John
Fraser, Peter (South Angus)


Blackburn, John
Fry, Peter


Blaker, Peter
Gardiner, George (Reigate)


Body, Richard
Gardner, Sir Edward


Bonsor, Sir Nicholas
Garel-Jones, Tristan


Bottomley, Peter (W'wich W)
Gilmour, Rt Hon Sir Ian


Bowden, Andrew
Glyn, Dr Alan


Boyson, Dr Rhodes
Goodhart, Sir Philip


Braine, Sir Bernard
Gorst, John


Bright, Graham
Gow, Ian


Brinton, Tim
Gower, Sir Raymond


Brittan, Rt. Hon. Leon
Gray, Rt Hon Hamish


Brooke, Hon Peter
Greenway, Harry


Brotherton, Michael
Griffiths, E.(B'y St. Edm'ds)


Brown, Michael(Brigg &amp; Sc'n)
Griffiths, Peter (Portsm'th N)


Browne, John (Winchester)
Grist, Ian


Bruce-Gardyne, John
Grylls, Michael


Bryan, Sir Paul
Gummer, John Selwyn


Buchanan-Smith, Rt. Hon. A.
Hamilton, Hon A.


Buck, Antony
Hamilton, Michael (Salisbury)


Budgen, Nick
Hannam, John


Burden, Sir Frederick
Haselhurst, Alan


Butcher, John
Hastings, Stephen


Butler, Hon Adam
Havers, Rt Hon Sir Michael


Carlisle, John (Luton West)
Hawkins, Sir Paul


Carlisle, Kenneth (Lincoln)
Hawksley, Warren


Carlisle, Rt Hon M. (R'c'n)
Hayhoe, Barney


Chalker, Mrs. Lynda
Heath, Rt Hon Edward


Channon, Rt. Hon. Paul
Heddle, John


Chapman, Sydney
Henderson, Barry


Churchill, W. S.
Hicks, Robert


Clark, Hon A. (Plym'th, S'n)
Higgins, Rt Hon Terence L.


Clark, Sir W. (Croydon S)
Hogg, Hon Douglas (Gr'th'm)


Clarke, Kenneth (Rushcliffe)
Holland, Philip (Carlton)


Clegg, Sir Walter
Hooson, Tom


Cockeram, Eric
Hordern, Peter


Colvin, Michael
Howe, Rt Hon Sir Geoffrey


Cormack, Patrick
Howell, Rt Hon D. (G'ldf'd)


Corrie, John
Howell, Ralph (N Norfolk)


Costain, Sir Albert
Hunt, David (Wirral)


Cranborne, Viscount
Hunt, John (Ravensbourne)


Critchley, Julian
Hurd, Rt Hon Douglas


Crouch, David
Irvine, RtHon Bryant Godman


Dickens, Geoffrey
Irving, Charles (Cheltenham)


Dorrell, Stephen
Jenkin, Rt Hon Patrick


Douglas-Hamilton, Lord J.
Johnson Smith, Sir Geoffrey


Dover, Denshore
Jopling, Rt Hon Michael


du Cann, Rt Hon Edward
Joseph, Rt Hon Sir Keith


Dunn, Robert (Dartford)
Kaberry, Sir Donald






Kellett-Bowman, Mrs Elaine
Prior, Rt Hon James


Kimball, Sir Marcus
Proctor, K. Harvey


King, Rt Hon Tom
Raison, Rt Hon Timothy


Kitson, Sir Timothy
Rathbone, Tim


Knight, Mrs Jill
Rees-Davies, W. R.


Knox, David
Renton, Tim


Lang, Ian
Rhodes James, Robert


Langford-Holt, Sir John
Rhys Williams, Sir Brandon


Latham, Michael
Ridley, Hon Nicholas


Lawrence, Ivan
Ridsdale, Sir Julian


Lawson, Rt Hon Nigel
Rifkind, Malcolm


Lee, John
Rippon, Rt Hon Geoffrey


Le Marchant, Spencer
Roberts, Wyn (Conway)


Lennox-Boyd, Hon Mark
Rossi, Hugh


Lester, Jim (Beeston)
Rost, Peter


Lewis, Sir Kenneth (Rutland)
Royle, Sir Anthony


Lloyd, Ian (Havant &amp; W'loo)
Rumbold, Mrs A. C. R.


Loveridge, John
Sainsbury, Hon Timothy


Luce, Richard
St. John-Stevas, Rt Hon N.


Lyell, Nicholas
Scott, Nicholas


McCrindle, Robert
Shaw, Giles (Pudsey)


Macfarlane, Neil
Shaw, Sir Michael (Scarb')


MacGregor, John
Shelton, William (Streatham)


MacKay, John (Argyll)
Shepherd, Colin (Hereford)


Macmillan, Rt Hon M.
Shepherd, Richard


McNair-Wilson, M. (N'bury)
Silvester, Fred


McNair-Wilson, P. (New F'st)
Sims, Roger


McQuarrie, Albert
Skeet, T. H. H.


Madel, David
Smith, Tim (Beaconsfield)


Major, John
Speed, Keith


Marland, Paul
Speller, Tony


Marlow, Antony
Spence, John


Marshall, Michael (Arundel)
Spicer, Michael (S Worcs)


Marten, Rt Hon Neil
Sproat, Iain


Mates, Michael
Squire, Robin


Maude, Rt Hon Sir Angus
Stainton, Keith


Mawby, Ray
Stanbrook, Ivor


Maxwell-Hyslop, Robin
Stanley, John


Mayhew, Patrick
Steen, Anthony


Mellor, David
Stevens, Martin


Meyer, Sir Anthony
Stewart, A.(E Renfrewshire)


Miller, Hal (B'grove)
Stewart, Ian (Hitchin)


Mills, Iain (Meriden)
Stokes, John


Mills, Sir Peter (West Devon)
Stradling Thomas, J.


Miscampbell, Norman
Tapsell, Peter


Moate, Roger
Taylor, Teddy (S'end E)


Monro, Sir Hector
Tebbit, Rt Hon Norman


Montgomery, Fergus
Temple-Morris, Peter


Moore, John
Thomas, Rt Hon Peter


Morgan, Geraint
Thompson, Donald


Morris, M. (N'hampton S)
Thorne, Neil (Ilford South)


Morrison, Hon C. (Devizes)
Thornton, Malcolm


Morrison, Hon P. (Chester)
Townend, John (Bridlington)


Mudd, David
Townsend, Cyril D, (B'heath)


Murphy, Christopher
van Straubenzee, Sir W.


Myles, David
Vaughan, Dr Gerard


Neale, Gerrard
Viggers, Peter


Needham, Richard
Waddington, David


Nelson, Anthony
Wakeham, John


Neubert, Michael
Waldegrave, Hon William


Newton, Tony
Walker, Rt Hon P.(W'cester)


Normanton, Tom
Walker, B. (Perth)


Nott, Rt Hon Sir John
Walker-Smith, Rt Hon Sir D.


Onslow, Cranley
Wall, Sir Patrick


Oppenheim, Rt Hon Mrs S.
Waller, Gary


Page, John (Harrow, West)
Walters, Dennis


Page, Richard (SW Herts)
Ward, John


Parkinson, Rt Hon Cecil
Warren, Kenneth


Parris, Matthew
Watson, John


Patten, Christopher (Bath)
Wells, Bowen


Patten, John (Oxford)
Wells, John (Maidstone)


Pattie, Geoffrey
Wheeler, John


Pawsey, James
Whitney, Raymond


Peyton, Rt Hon John
Wickenden, Keith


Pink, R. Bonner
Wiggin, Jerry


Pollock, Alexander
Williams, D.(Montgomery)


Porter, Barry
Winterton, Nicholas


Prentice, Rt Hon Reg
Wolfson, Mark


Price, Sir David (Eastleigh)
Young, Sir George (Acton)





Younger, Rt Hon George
Mr. John Cope and



Mr. Alastair Goodlad.


Tellers for the Ayes:



NOES


Abse, Leo
Gilbert, Rt Hon Dr John


Allaun, Frank
Golding, John


Alton, David
Grant, John (Islington C)


Anderson, Donald
Grimond, Rt Hon J.


Archer, Rt Hon Peter
Hamilton, James (Bothwell)


Ashley, Rt Hon Jack
Hamilton, W. W. (C'tral Fife)


Ashton, Joe
Harrison, Rt Hon Walter


Atkinson, N.(H'gey,)
Haynes, Frank


Barnett, Guy (Greenwich)
Healey, Rt Hon Denis


Barnett, Rt Hon Joel (H'wd)
Heffer, Eric S.


Beith, A. J.
Hogg, N. (E Dunb't'nshire)


Benn, Rt Hon Tony
Holland, S. (L'b'th, Vauxh'll)


Bennett, Andrew(St'kp't N)
Home Robertson, John


Bidwell, Sydney
Horam, John


Booth, Rt Hon Albert
Howells, Geraint


Bottomley, Rt Hon A.(M'b'ro)
Hoyle, Douglas


Bray, Dr Jeremy
Huckfield, Les


Brown, Hugh D. (Provan)
Hudson Davies, Gwilym E.


Brown, Ronald W. (H'ckn'y S)
Hughes, Robert (Aberdeen N)


Brown, Ron (E'burgh, Leith)
Hughes, Roy (Newport)


Buchan, Norman
Hughes, Simon (Bermondsey)


Callaghan, Rt Hon J.
Janner, Hon Greville


Campbell, Ian
Jay, Rt Hon Douglas


Campbell-Savours, Dale
Jenkins, Rt Hon Roy (Hillh'd)


Canavan, Dennis
John, Brynmor


Cant, R. B.
Johnson, James (Hull West)


Carmichael, Neil
Johnson, Walter (Derby S)


Carter-Jones, Lewis
Jones, Barry (East Flint)


Cartwright, John
Jones, Dan (Burnley)


Clark, Dr David (S Shields)
Kerr, Russell


Clarke.Thomas(C'b'dge, A'rie)
Kilroy-Silk, Robert


Cocks, Rt Hon M. (B'stol S)
Lambie, David


Cohen, Stanley
Lamond, James


Coleman, Donald
Leadbitter, Ted


Concannon, Rt Hon J. D.
Leighton, Ronald


Cook, Robin F.
Lestor, Miss Joan


Craigen, J. M. (G'gow, M'hill)
Lewis, Arthur (N'ham NW)


Crawshaw, Richard
Lewis, Ron (Carlisle)


Crowther, Stan
Litherland, Robert


Cryer, Bob
Lofthouse, Geoffrey


Cunliffe, Lawrence
Lyon, Alexander (York)


Cunningham, G. (Islington S)
Lyons, Edward (Bradf'd W)


Dalyell, Tam
McDonald, Dr Oonagh


Davidson, Arthur
McElhone, Mrs Helen


Davis, Clinton (Hackney C)
McGuire, Michael (Ince)


Davis, Terry (B'ham, Stechf'd)
McKay, Allen (Penistone)


Deakins, Eric
McKelvey, William


Dean, Joseph (Leeds West)
MacKenzie, Rt Hon Gregor


Dewar, Donald
Maclennan, Robert


Dobson, Frank
McMahon, Andrew


Dormand, Jack
McNamara, Kevin


Douglas, Dick
McTaggart, Robert


Dubs, Alfred
Magee, Bryan


Duffy, A. E. P.
Marshall, D(G'gow S'ton)


Dunwoody, Hon Mrs G.
Martin, M(G'gow S'burn)


Eadie, Alex
Mason, Rt Hon Roy


Eastham, Ken
Maxton, John


Ellis, R. (NE D'bysh're)
Maynard, Miss Joan


Ellis, Tom (Wrexham)
Meacher, Michael


English, Michael
Mikardo, Ian


Ennals, Rt Hon David
Millan, Rt Hon Bruce


Evans, Ioan (Aberdare)
Mitchell, Austin (Grimsby)


Evans, John (Newton)
Mitchell, R. C. (Soton Itchen)


Faulds, Andrew
Morris, Rt Hon A. (W'shawe)


Field, Frank
Morris, Rt Hon C. (O'shaw)


Flannery, Martin
Moyle, Rt Hon Roland


Foot, Rt Hon Michael
Newens, Stanley


Ford, Ben
Oakes, Rt Hon Gordon


Forrester, John
Ogden, Eric


Foulkes, George
O'Halloran, Michael


Fraser, J. (Lamb'th, N'w'd)
O'Neill, Martin


Freeson, Rt Hon Reginald
Orme, Rt Hon Stanley


Freud, Clement
Owen, Rt Hon Dr David


Garrett, John (Norwich S)
Paisley, Rev Ian


George, Bruce
Palmer, Arthur






Park, George
Stallard, A. W.


Parker, John
Steel, Rt Hon David


Parry, Robert
Stoddart, David


Pavitt, Laurie
Stott, Roger


Pendry, Tom
Straw, Jack


Pitt, William Henry
Summerskill, Hon Dr Shirley


Powell, Raymond (Ogmore)
Thomas, Jeffrey (Abertillery)


Prescott, John
Thomas, Mike (Newcastle E)


Price, C. (Lewisham W)
Thomas, Dr R.(Carmarthen)


Race, Reg
Tilley, John


Radice, Giles
Torney, Tom


Rees, Rt Hon M (Leeds S)
Varley, Rt Hon Eric G.


Richardson, Jo
Wainwright, E.(Dearne V)


Roberts, Albert (Normanton)
Wainwright, R.(Colne V)


Roberts, Allan (Bootle)
Walker, Rt Hon H.(D'caster)


Roberts, Ernest (Hackney N)
Wardell, Gareth


Roberts, Gwilym (Cannock)
Watkins, David


Robinson, G. (Coventry NW)
Weetch, Ken


Rooker, J. W.
Welsh, Michael


Roper, John
White, Frank R.


Ross, Ernest (Dundee West)
White, J. (G'gow Pollok)


Ross, Stephen (Isle of Wight)
Whitehead, Phillip


Rowlands, Ted
Whitlock, William


Ryman, John
Wigley, Dafydd


Sandelson, Neville
Willey, Rt Hon Frederick


Sever, John
Williams, Rt Hon A.(S'sea W)


Sheldon, Rt Hon R.
Wilson, Gordon (Dundee E)


Shore, Rt Hon Peter
Wilson, Rt Hon Sir H.(H'ton)


Short, Mrs Renée
Wilson, William (C'try SE)


Silkin, Rt Hon J. (Deptford)
Winnick, David


Silkin, Rt Hon S. C. (Dulwich)
Woodall, Alec


Silverman, Julius
Woolmer, Kenneth


Skinner, Dennis
Wrigglesworth, Ian


Smith, Cyril (Rochdale)
Wright, Sheila


Smith, Rt Hon J. (N Lanark)
Young, David (Bolton E)


Snape, Peter



Soley, Clive
Tellers for the Noes:


Spearing, Nigel
Dr. Edmund Marshall and


Spellar, John Francis (B'ham)
Mr. George Morton.


Spriggs, Leslie

Question accordingly, agreed to.

Resolved,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

(a) any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax, otherwise than by a provision relating to supplies to, and importation by, a government department, within the meaning of section 19 of the Finance Act 1972;
(iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

Description of wine
Rates of duty per hectoliter



£


Wine of a strength—



not exceeding 15 per cent.… … … … … …
113·00


exceeding 15 but not exceeding 18 per cent. …
145·90


exceeding 18 but not exceeding 22 per cent. …
171·70


exceeding 22 per cent. … … … … … … …
171·70 plus



£15·19 for every 1 per cent. or part of 1 per cent. in excess of 22 per cent.;



each of the above rates of duty being, in the case of sparkling wine, increased by £24·80 per hectolitre.

(b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable, other than—

(i) an amendment providing for a different rate of surcharge to be paid by the bodies specified in section 143(4) of the Finance Act 1982; and
(ii) an amendment relating to the Commission to be established under the Act resulting from the National Heritage Bill [Lords].

Mr. Speaker: I am now required, under Standing Order No. 94(2), to put successively without further debate the Questions on Ways and means motions Nos. 2 to 31, on the three motions on procedure and on the Finance [Money] motion on all of which the Finance Bill is to be brought in. To help the House I shall take them in groups, but read out their titles. If any hon. Member wishes to divide the House, I am sure that he will make it clear.

2. SPIRITS

Motion made, and Question,
That, as from 16 March 1983, the rate of duty specified in section 5 of the Alcoholic Liquor Duties Act 1979 shall be increased from £14·47 per litre of alcohol in the spirits to £15·19 per litre of alcohol in the spirits.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

3. BEER

Motion made, and Question,
That, as from 16 March, 1983, the rates of duty specified in section 36 of the Alcoholic Liquor Duties Act 1979 shall be increased—

(a) from £20·40 for each hectolitre to £21·60 for each hectolitre; and
(b) from £0·68 for each additional degree of original gravity exceeding 1030 degrees to £0·72 for each such additional degree.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions) and agreed to.

4. WINE

Motion made, and Question,
That, as from 16 March 1983, the rates of duty under section 54 of the Alcoholic Liquor Duties Act 1979 shall be as follows—

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.] put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

Description of made-wine
Rates of duty per hectolitre



£


Made-wine of a strength—



not exceeding 10 per cent. … … … … … …
79·30


exceeding 10 but not exceeding 15 per cent. …
109·80


exceeding 15 but not exceeding 18 per cent. …
135·20


exceeding 18 per cent. … … … … … … …
135·20 plus



£15·19 for every 1 per cent, or part of 1 per cent, in excess of 18 per cent.;



each of the above rates of duty being, in the case of sparkling made-wine, increased by £11·35 per hectolitre.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.] put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

6. CIDER

Motion made, and Question,
That, as from 16 March 1983, the rate of duty specified in section 62(1) of the Alcoholic Liquor Duties Act 1979 shall be increased from £8·16 per hectolitre to £9·69 per hectolitre.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

7. TOBACCO PRODUCTS

Motion made, and Question,
That, as from 18th March 1983, for the Table in Schedule 1 to the Tobacco Products Duty Act 1979 there shall be substituted the following Table—

"TABLE


1. Cigarettes … … … …
An amount equal to 21 per cent, of the retail price plus £21·67 per thousand cigarettes


2. Cigars … … … …
£40·85 per kilogram


3. Hand-rolling tobacco … …
£35·40 per kilogram


4. Other smoking tobacco and chewing tobacco … …
£24·95 per kilogram"

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

8. BINGO DUTY

Motion made, and Question,
That new provision may be made with respect to bingo duty.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

9. HYDROCARBON OIL

Motion made, and Question,

5. MADE-WINE

Motion made, and Question,
That, as from 16 March 1983, the rates of duty under section 55 of the Alcoholic Liquor Duties Act 1979 shall be as follows—

That, as from six o'clock in the evening of 15 March 1983, the rates of duty specified in section 6(1) of the Hydrocarbon Oil Duties Act 1979 shall be increased—

(a) in the case of light oil, from £0·1554 a litre to £0·1630 a litre; and
(b) in the case of heavy oil, from £0·1325 a litre to £0·1382 a litre.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act l968—[Sir Geoffrey Howe.]

Put forthwith pursuant to Standing Order No.94 (Ways and Means motions):

The House divided: Ayes 297, Noes 226.

Division No. 95]
[10.26 pm


AYES


Aitken, Jonathan
Brotherton, Michael


Alexander, Richard
Brown, Michael(Brigg &amp; Sc'n)


Alison, Rt Hon Michael
Browne, John (Winchester)


Amery, Rt Hon Julian
Bruce-Gardyne, John


Ancram, Michael
Bryan, Sir Paul


Arnold, Tom
Buchanan-Smith, Rt. Hon. A


Aspinwall, Jack
Buck, Antony


Atkins, Rt Hon H.(S'thorne)
Budgen, Nick


Atkins, Robert(Presfon N)
Burden, Sir Frederick


Baker, Kenneth(St.M'bone)
Butcher, John


Baker, Nicholas (N Dorset)
Butler, Hon Adam


Banks, Robert
Carlisle, John (Luton West)


Beaumont-Dark, Anthony
Carlisle, Kenneth (Lincoln)


Bendall, Vivian
Carlisle, Rt Hon M. (R'c'n)


Benyon, Thomas (A'don)
Chalker, Mrs. Lynda


Benyon, W. (Buckingham)
Channon, Rt. Hon. Paul


Berry, Hon Anthony
Chapman, Sydney


Best, Keith
Churchill, W. S.


Bevan, David Gilroy
Clark, Hon A. (Plym'th, S'n)


Biffen, Rt Hon John
Clark, Sir W. (Croydon S)


Biggs-Davison, Sir John
Clarke, Kenneth (Rushcliffe)


Blackburn, John
Clegg, Sir Walter


Blaker, Peter
Cockeram, Eric


Body, Richard
Colvin, Michael


Bonsor, Sir Nicholas
Cormack, Patrick


Bottomley, Peter (W'wich W)
Corrie, John


Bowden, Andrew
Costain, Sir Albert


Boyson, Dr Rhodes
Cranborne, Viscount


Braine, Sir Bernard
Critchley, Julian


Bright, Graham
Crouch, David


Brinton, Tim
Dickens, Geoffrey


Brittan, Rt. Hon. Leon
Dorrell, Stephen


Brooke, Hon Peter
Douglas-Hamilton, Lord J.






Dover, Denshore
Lawrence, Ivan


du Cann, Rt Hon Edward
Lawson, Rt Hon Nigel


Dunn, Robert (Dartford)
Lee, John


Durant, Tony
Le Marchant, Spencer


Dykes, Hugh
Lennox-Boyd, Hon Mark


Eden, Rt Hon Sir John
Lester, Jim (Beeston)


Edwards, Rt Hon N. (P'broke)
Lewis, Sir Kenneth (Rutland)


Eggar, Tim
Lloyd, Ian (Havant &amp; W'loo)


Emery, Sir Peter
Loveridge, John


Eyre, Reginald
Luce, Richard


Fairbairn, Nicholas
Lyell, Nicholas


Fairgrieve, Sir Russell
McCrindle, Robert


Faith, Mrs Sheila
Macfarlane, Neil


Farr, John
MacGregor, John


Fenner, Mrs Peggy
MacKay, John (Argyll)


Finsberg, Geoffrey
Macmillan, Rt Hon M.


Fisher, Sir Nigel
McNair-Wilson, M, (N'bury)


Fletcher, A. (Ed'nb'gh N)
McNair-Wilson, P. (New F'st)


Fletcher-Cooke, Sir Charles
McQuarrie, Albert


Fookes, Miss Janet
Madel, David


Forman, Nigel
Major, John


Fowler, Rt Hon Norman
Marland, Paul


Fraser, Rt Hon Sir Hugh
Marlow, Antony


Fraser, Peter (South Angus)
Marshall, Michael (Arundel)


Fry, Peter
Marten, Rt Hon Neil


Gardiner, George (Reigate)
Mates, Michael


Gardner, Sir Edward
Maude, Rt Hon Sir Angus


Garel-Jones, Tristan
Mawby, Ray


Gilmour, Rt Hon Sir Ian
Maxwell-Hyslop, Robin


Glyn, Dr Alan
Mayhew, Patrick


Goodhart, Sir Philip
Mellor, David


Gorst, John
Meyer, Sir Anthony


Gow, Ian
Miller, Hal (B'grove)


Gower, Sir Raymond
Mills, Iain (Meriden)


Gray, Rt Hon Hamish
Mills, Sir Peter (West Devon)


Greenway, Harry
Miscampbell, Norman


Griffiths, E.(B'y St. Edm'ds)
Moate, Roger


Griffiths, Peter (Portsm'th N)
Monro, Sir Hector


Grist, Ian
Montgomery, Fergus


Grylls, Michael
Moore, John


Gummer, John Selwyn
Morgan, Geraint


Hamilton, Hon A.
Morris, M. (N'hampton S)


Hamilton, Michael (Salisbury)
Morrison, Hon C. (Devizes)


Hannam,John
Morrison, Hon P. (Chester)


Haselhurst, Alan
Mudd, David


Havers, Rt Hon Sir Michael
Murphy, Christopher


Hawkins, Sir Paul
Myles, David


Hawksley, Warren
Neale, Gerrard


Hayhoe, Barney
Needham, Richard


Heath, Rt Hon Edward
Nelson, Anthony


Heddle, John
Neubert, Michael


Henderson, Barry
Newton, Tony


Hicks, Robert
Normanton, Tom


Higgins, Rt Hon Terence L.
Nott, Rt Hon Sir John


Hogg, Hon Douglas (Gr'th'm)
Onslow, Cranley


Holland, Philip (Carlton)
Oppenheim, Rt Hon Mrs S.


Hooson, Tom
Page, John (Harrow, West)


Hordern, Peter
Page, Richard (SW Herts)


Howe, Rt Hon Sir Geoffrey
Parkinson, Rt Hon Cecil


Howell, Rt Hon D. (G'ldf'd)
Parris, Matthew


Howell, Ralph (N Norfolk)
Patten, Christopher (Bath)


Hunt, David (Wirral)
Patten, John (Oxford)


Hunt, John (Ravensbourne)
Pattie, Geoffrey


Hurd, Rt Hon Douglas
Pawsey, James


Irvine, Rt Hon Bryant Godman
Peyton, Rt Hon John


Irving, Charles (Cheltenham)
Pink, R. Bonner


Jenkin, Rt Hon Patrick
Pollock, Alexander


Johnson Smith, Sir Geoffrey
Porter, Barry


Jopling, Rt Hon Michael
Prentice, Rt Hon Reg


Joseph, Rt Hon Sir Keith
Price, Sir David (Eastleigh)


Kaberry, Sir Donald
Prior, Rt Hon James


Kellett-Bowman, Mrs Elaine
Proctor, K. Harvey


Kimball, Sir Marcus
Raison, Rt Hon Timothy


King, Rt Hon Tom
Rathbone, Tim


Kitson, Sir Timothy
Rees-Davies, W. R.


Knight, Mrs Jill
Renton, Tim


Knox, David
Rhodes James, Robert


Lang, Ian
Rhys Williams, Sir Brandon


Langford-Holt, Sir John
Ridley, Hon Nicholas


Latham, Michael
Ridsdale, Sir Julian





Rifkind, Malcolm
Temple-Morris, Peter


Rippon, Rt Hon Geoffrey
Thomas, Rt Hon Peter


Roberts, Wyn (Conway)
Thompson, Donald


Rossi, Hugh
Thorne, Neil (Ilford South)


Rost, Peter
Thornton, Malcolm


Royle, Sir Anthony
Townend, John (Bridlington)


Rumbold, Mrs A. C. R.
Townsend, Cyril D, (B'heath)


Sainsbury, Hon Timothy
van Straubenzee, Sir W.


St. John-Stevas, Rt Hon N.
Vaughan, Dr Gerard


Scott, Nicholas
Viggers, Peter


Shaw, Giles (Pudsey)
Waddington, David


Shaw, Sir Michael (Scarb')
Wakeham, John


Shelton, William (Streatham)
Waldegrave, Hon William


Shepherd, Colin (Hereford)
Walker, Rt Hon P.(W'cester)


Shepherd, Richard
Walker, B. (Perth)


Silvester, Fred
Walker-Smith, Rt Hon Sir D.


Sims, Roger
Wall, Sir Patrick


Skeet, T. H. H.
Waller, Gary


Smith, Tim (Beaconsfield)
Walters, Dennis


Speed, Keith
Ward, John


Speller, Tony
Warren, Kenneth


Spence, John
Watson, John


Spicer, Michael (S Worcs)
Wells, Bowen


Sproat, Iain
Wells, John (Maidstone)


Squire, Robin
Wheeler, John


Stainton, Keith
Whitney, Raymond


Stanbrook, Ivor
Wickenden, Keith


Stanley, John
Wiggin, Jerry


Steen, Anthony
Williams, D.(Montgomery)


Stevens, Martin
Winterton, Nicholas


Stewart, A.(E Renfrewshire)
Wolfson, Mark


Stewart, Ian (Hitchin)
Young, Sir George (Acton)


Stokes, John
Younger, Rt Hon George


Stradling Thomas, J.



Tapsell, Peter
Tellers for the Ayes:


Taylor, Teddy (S'end E)
Mr. John Cope and


Tebbit, Rt Hon Norman
Mr. Alastair Goodlad.


NOES


Abse, Leo
Cunningham, G. (Islington S)


Allaun, Frank
Dalyell, Tam


Alton, David
Davidson, Arthur


Anderson, Donald
Davis, Clinton (Hackney C)


Archer, Rt Hon Peter
Davis, Terry (B'ham, Stechf'd)


Ashley, Rt Hon Jack
Deakins, Eric


Ashton, Joe
Dean, Joseph (Leeds West)


Atkinson, (H'gey,)
Dewar, Donald


Barnett, Guy (Greenwich)
Dobson, Frank


Barnett, Rt Hon Joel (H'wd)
Dormand, Jack


Beith, A. J.
Douglas, Dick


Benn, Rt Hon Tony
Dubs, Alfred


Bennett, Andrew(St'kp't N)
Duffy, A. E. P.


Bidwell, Sydney
Dunwoody, Hon Mrs G.


Booth, Rt Hon Albert
Eadie, Alex


Bottomley, Rt Hon A.(M'b'ro)
Eastham, Ken


Bray, Dr Jeremy
Ellis, R. (NE D'bysh're)


Brown, Hugh D. (Provan)
Ellis, Tom (Wrexham)


Brown, Ronald W. (H'ckn'y S)
English, Michael


Brown, Ron (E'burgh, Leith)
Ennals, Rt Hon David


Buchan, Norman
Evans, loan (Aberdare)


Callaghan, Rt Hon J.
Evans, John (Newton)


Campbell, Ian
Faulds, Andrew


Campbell-Savours, Dale
Field, Frank


Canavan, Dennis
Flannery, Martin


Cant, R. B.
Foot, Rt Hon Michael


Carmichael, Neil
Ford, Ben


Carter-Jones, Lewis
Forrester, John


Cartwright, John
Foulkes, George


Clark, Dr David (S Shields)
Fraser, J. (Lamb'th, N'w'd)


Clarke, Thomas(C'b'dge, A'rie)
Freeson, Rt Hon Reginald


Cocks, Rt Hon M. (B'stol S)
Freud, Clement


Cohen, Stanley
Garrett, John (Norwich S)


Coleman, Donald
George, Bruce


Concannon, Rt Hon J. D.
Gilbert, Rt Hon Dr John


Cook, Robin F.
Golding, John


Craigen, J. M. (G'gow, M'hill)
Grant, John (Islington C)


Crawshaw, Richard
Grimond, Rt Hon J.


Crowther, Stan
Hamilton, James (Bothwell)


Cryer, Bob
Hamilton, W. W. (C'tral Fife)


Ounliffe, Lawrence
Harrison, Rt Hon Walter






Healey, Rt Hon Denis
Mason, Rt Hon Roy


Heffer, Eric S.
Maxton, John


Hogg, N. (E Dunb't'nshire)
Maynard, Miss Joan


Holland, S. (L'b'th, Vauxh'll)
Meacher, Michael


Home Robertson, John
Mikardo, Ian


Horam, John
Millan, Rt Hon Bruce


Howells, Geraint
Mitchell, Austin (Grimsby)


Hoyle, Douglas
Mitchell, R. C. (Soton Itchen)


Huckfield, Les
Morris, Rt Hon A. (W'shawe)


Hudson Davies, Gwilym E.
Morris, Rt Hon C. (O'shaw)


Hughes, Robert (Aberdeen N)
Moyle, Rt Hon Roland


Hughes, Roy (Newport)
Newens, Stanley


Hughes, Simon (Bermondsey)
Oakes, Rt Hon Gordon


Janner, Hon Greville
Ogden, Eric


Jay, Rt Hon Douglas
O'Halloran, Michael


Jenkins, Rt Hon Roy (Hillh'd)
O'Neill, Martin


John, Brynmor
Orme, Rt Hon Stanley


Johnson, James (Hull West)
Owen, Rt Hon Dr David


Johnson, Walter (Derby S)
Paisley, Rev Ian


Jones, Barry (East Flint)
Palmer, Arthur


Jones, Dan (Burnley)
Park, George


Kerr, Russell
Parker, John


Kilroy-Silk, Robert
Parry, Robert


Lambie, David
Pavitt, Laurie


Lamond, James
Pendry, Tom


Leadbitter, Ted
Pitt, William Henry


Leighton, Ronald
Powell, Rt Hon J.E. (S Down)


Lestor, Miss Joan
Powell, Raymond (Ogmore)


Lewis, Arthur (N'ham NW)
Prescott, John


Lewis, Ron (Carlisle)
Price, C. (Lewisham W)


Litherland, Robert
Race, Reg


Lofthouse, Geoffrey
Radice, Giles


Lyon, Alexander (York)
Rees, Rt Hon M (Leeds S)


Lyons, Edward (Bradf'd W)
Richardson, Jo


McDonald, Dr Oonagh
Roberts, Albert (Normanton)


McElhone, Mrs Helen
Roberts, Allan (Bootle)


McGuire, Michael (Ince)
Roberts, Ernest (Hackney N)


McKelvey, William
Roberts, Gwilym (Cannock)


MacKenzie, Rt Hon Gregor
Robinson, G. (Coventry NW)


Maclennan, Robert
Rooker, J. W.


McMahon, Andrew
Roper, John


McNamara, Kevin
Ross, Ernest (Dundee West)


McTaggart, Robert
Ross, Stephen (Isle of Wight)


Magee, Bryan
Rowlands, Ted


Marshall, D(G'gow S'ton)
Ryman, John


Marshall, Dr Edmund (Goole)
Sandelson, Neville


Martin, M(G'gow S'burn)
Sever, John





Sheldon, Rt Hon R.
Wainwright, H.(Colne V)


Shore, Rt Hon Peter
Walker, Rt Hon H.(D'caster)


Short, Mrs Renée
Warden, Gareth


Silkin, Rt Hon J. (Deptford)
Watkins, David


Silkin, Rt Hon S. C. (Dulwich)
Weetch, Ken


Silverman, Julius
Welsh, Michael


Skinner, Dennis
White, Frank R.


Smith, Cyril (Rochdale)
White, J. (G'gow Pollok)


Smith, Rt Hon J. (N Lanark)
Whitehead, Phillip


Snape, Peter
Whitlock, William


Soley, Clive
Wig ley, Dafydd


Spearing, Nigel
Willey, Rt Hon Frederick


Spellar, John Francis (B'ham)
Williams, Rt Hon A.(S'sea W)


Spriggs, Leslie
Wilson, Gordon (Dundee E)


Stallard, A. W.
Wilson, Rt Hon Sir H.(H'ton)


Steel, Rt Hon David
Wilson, William (C'try SE)


Stoddart, David
Winnick, David


Stott, Roger
Woodall, Alec


Straw, Jack
Woolmer, Kenneth


Summerskill, Hon Dr Shirley
Wrigglesworth, Ian


Thomas, Jeffrey (Abertillery)
Wright, Sheila


Thomas, Mike (Newcastle E)
Young, David (Bolton E)


Thomas, Dr R.(Carmarthen)



Tilley, John
Tellers for the Noes:


Torney, Tom
Mr. Frank Haynes and


Varley, Rt Hon Eric G.
Mr. George Morton.


Wainwright, E.(Dearne V)

Question accordingly agreed to.

10. VEHICLES EXCISE DUTY

Motion made, and Question,
That the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 shall have effect with the amendments set out below.
But this Resolution shall not authorise the making of amendments which would result in different provisions being in force in different parts of Great Britain.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
(1) In the said Acts of 1971 and 1972, for the provisions of Part II of Schedules 1 to 5 (annual rates of duty) there shall be substituted the provisions set out below:

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE I TO ACT OF 1971 AND ACT OF 1972


Description of Vehicle
Rate of Duty



£


1. Bicycles and tricycles of which the cylinder capacity of the engine does not exceed 150 cubic centimetres … … … … … … … … … …
8·50


2. Bicycles of which the cylinder capacity of the engine exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres; tricycles (other than those in the foregoing paragraph) and vehicles (other than mowing machines) with more than three wheels, being tricycles and vehicles neither constructed nor adapted for use nor used for the carriage of a driver or passenger … … …
17·00


3. Bicycles and tricycles not in the foregoing paragraphs … … … …
34·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 2 TO ACT OF 1971 AND ACT OF 1972


Description of Vehicle
Rate of Duty



£


Hackney carriages.… … … … … … … … …
42·00



with an additional 85p for each person above 20 (excluding the driver) for which the vehicle has seating capacity.

POVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3 TO ACT OF 1971



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Not exceeding
Initial
Additional for each ton or part of a ton in excess of the weight in column 2





£
£


1. Agricultural machines; digging machines; mobile cranes; works trucks; mowing machines; fishermen's tractors
—
—
14·00
—


2. Haulage vehicles, being showmen's vehicles
—
7¼ tons
137·00
—



7¼ tons
8 tons
164·00
—



8 tons
10 tons
193·00
—



10 tons
—
193·00
30·00


3. Haulage vehicles, not being showmen's vehicles
—
2 tons
163·00
—



2 tons
4 tons
293·00
—



4 tons
6 tons
424·00
—



6 tons
7¼ tons
553·00
—



7¼ tons
8 tons
676·00
—



8 tons
10 tons
676·00
115·00



10 tons
—
906·00
130·00

POVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3 TO ACT OF 1972



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Not exceeding
Initial
Additional for each ton or part of a ton in excess of the weight in column 2





£
£


1. Agricultural machines; digging machines; mobile cranes; works trucks; mowing machines; fishermen's tractors
—
—
14·00
—


2. Haulage vehicles, being showmen's vehicles
—
7¼ tons
137·00
—



7¼ tons
8 tons
164·00
—



8 tons
10 tons
193·00
—



10 tons
—
193·00
30·00


3. Haulage vehicles, not being showmen's vehicles
—
2 tons
147·00
—



2 tons
4 tons
262·00
—



4 tons
6 tons
374·00
—



6 tons
7¼ tons
489·00
—



7¼ tons
8 tons
603·00
—



8 tons
10 tons
603·00
130·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 4 TO ACT OF 1971 AND ACT OF 1972


TABLE A


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT


GENERAL RATES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


12
13
410
320
320


13
14
500
320
320


14
15
610
320
320


15
16
670
320
320


16
17
780
320
320


17
18
—
380
320


18
19
—
440
320


19
20
—
500
320


20
21
—
580
320


21
22
—
660
390


22
23
—
740
470


23
24
—
920
560


24
25
—
1,150
660


25
26
—
—
770


26
27
—
—
880


27
28
—
—
1,010


28
29
—
—
1,140


29
30
—
—
1,500


30
30·49
—
—
1,990

TABLE A(1)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT


RATES FOR FARMERS' GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
Tones
£
£
£


12
13
135
120
120


13
14
140
120
120


14
15
145
120
120


15
16
165
125
120


16
17
180
130
120


17
18
—
135
120


18
19
—
140
120


19
20
—
145
125


20
21
—
150
130


21
22
—
155
135


22
23
—
160
140


23
24
—
180
145


24
25
—
210
150


25
26
—
—
160


26
27
—
—
180


27
28
—
—
200


28
29
—
—
215


29
30
—
—
275


30
30·49
—
—
340

TABLE A(2)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


12
13
135
120
120


13
14
140
120
120


14
15
145
120
120


15
16
165
125
120


16
17
180
130
120


17
18
—
135
120


18
19
—
140
125


19
20
—
150
130


20
21
—
160
140


21
22
—
165
150


22
23
—
175
160


23
24
—
210
165


24
25
—
250
180


25
26
—
—
200


26
27
—
—
220


27
28
—
—
245


28
29
—
—
265


29
30
—
—
340


30
30·49
—
—
430

TABLE B


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES OVER 12 TONNES USED FOR


DRAWING TRAILERS EXCEEDING 4 TONNES PLATED GROSS WEIGHT


GENERAL RATES


Gross weight of trailer
Duty supplement


Exceeding
Not exceeding



tonnes
tonnes
£


4
8
70


8
10
90


10
12
115


12
14
160


14
—
300

TABLE B(1)


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES OVER 12 TONNES USED FOR


DRAWING TRAILERS EXCEEDING 4 TONNES PLATED GROSS WEIGHT


RATES FOR FARMERS' GOODS VEHICLES


Gross weight of trailer
Duty supplement


Exceeding
Not exceeding



tonnes
tonnes
£


4
8
70


8
10
90


10
12
115


12
14
160


14
—
300

TABLE B(2)


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES OVER 12 TONNES USED FOR


DRAWING TRAILERS EXCEEDING 4 TONNES PLATED GROSS WEIGHT


RATES FOR SHOWMEN'S GOODS VEHICLES


GROSS WEIGHT OF TRAILER
DUTY SUPPLEMENT


EXCEEDING
NOT EXCEEDING





£


—
—
70

TABLE C


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT


AND HAVING ONLY 2 AXLES


GENERAL RATES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
13
420
420
420


13
14
470
420
420


14
15
510
420
420


15
16
560
420
420


16
17
610
420
420


17
18
660
420
420


18
19
710
420
420


19
20
770
420
420


20
21
830
470
420


21
22
830
520
420


22
23
950
590
420


23
24
1,020
660
420


24
25
1,090
740
420


25
26
1,090
830
500


26
27
1,090
940
590


27
28
1,090
1,040
680


28
29
1,150
1,150
780


29
30
1,390
1,390
890


30
31
1,600
1,600
1,000


31
32
1,820
1,820
1,110


32
32·52
2,290
2,290
1,600


32·52
33
2,290
2,290
1,840


33
34
2,290
2,290
2,140


34
35
2,450
2,450
2,450


35
36
2,610
2,610
2,610


36
37
2,730
2,730
2,730


37
38
2,940
2,940
2,940

TABLE C(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
13
135
135
135


13
14
140
135
135


14
15
145
135
135


15
16
150
135
135


16
17
155
135
135


17
18
160
135
135


18
19
160
135
135


19
20
165
135
135


20
21
170
135
135


21
22
175
140
135


22
23
180
145
135


23
24
190
150
135


24
25
200
155
140


25
26
200
160
145


26
27
200
170
150


27
28
200
180
165


28
29
200
195
175


29
30
235
235
195


30
31
265
265
210


31
32
300
300
230


32
32·52
370
370
305


32·52
33
610
610
610


33
34
710
710
710


34
35
810
810
810


35
36
860
860
860


36
37
900
900
900


37
38
970
970
970

TABLE C(2)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
13
135
135
135


13
14
140
135
135


14
15
145
135
135


15
16
150
135
135


16
17
155
135
135


17
18
160
135
135


18
19
160
135
135


19
20
170
145
145


20
21
180
150
150


21
22
195
155
155


22
23
210
160
160


23
24
220
170
165


24
25
235
180
165


25
26
235
195
175


26
27
235
215
185


27
28
235
230
205


28
29
245
245
220


29
30
295
295
240


30
31
335
335
260


31
32
375
375
285


32
32·52
465
465
385


32·52
33
750
750
750


33
34
880
880
880


34
35
1,000
1,000
1,000


35
36
1,070
1,070
1,070


36
37
1,120
1,120
1,120


37
38
1,200
1,200
1,200

TABLE D


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


GENERAL RATES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
20
420
420
420


20
21
470
420
420


21
22
520
420
420


22
23
590
420
420


23
24
660
420
420


24
25
740
420
420


25
26
830
420
420


26
27
940
420
420


27
28
1,040
420
420


28
29
1,150
490
420


29
30
1,390
550
420


30
31
1,600
610
420


31
32
1,820
680
420


32
32·52
2,290
920
420


32·52
33
2,290
1,080
420


33
34
2,290
1,350
520


34
35
2,290
1,630
670


35
36
2,290
1,930
790


36
37
2,290
2,240
980


37
38
2,590
2,590
1,180

TABLE D(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
20
135
135
135


20
21
135
135
135


21
22
140
135
135


22
23
145
135
135


23
24
150
135
135


24
25
155
135
135


25
26
160
140
135


26
27
170
150
135


27
28
180
160
145


28
29
195
170
155


29
30
235
190
165


30
31
265
205
185


31
32
300
225
205


32
32·52
370
300
220


32·52
33
370
355
220


33
34
445
445
270


34
35
535
535
350


35
36
635
635
410


36
37
740
740
510


37
38
855
855
615

TABLE D(2)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
18
135
135
135


18
19
135
135
135


19
20
140
140
135


20
21
145
145
135


21
22
155
150
135


22
23
160
155
135


23
24
170
160
135


24
25
180
160
145


25
26
195
170
155


26
27
210
180
160


27
28
230
200
170


28
29
245
215
190


29
30
295
235
205


30
31
335
255
230


31
32
375
280
250


32
32·52
465
375
275


32·52
33
465
440
275


33
34
550
550
335


34
35
665
665
435


35
36
790
790
515


36
37
915
915
635


37
38
1,060
1,060
765

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 5 TO ACT OF 1971


Description of vehicle
Rate of day



£


1. Vehicles not exceeding 7 horse-power, if registered under the Roads Act 1920 for the first time before 1st January 1974 … … … … … … … …
60·00


2. Vehicles not included above … … … … … … … … … … …
85·

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 5 TO ACT OF 1972


Description of vehicle
Rate of duty



£


1. Vehicles first registered under the Roads Act 1920 before 1st January 1947, or which, if its first registration for taxation purposes had been effected in Northern Ireland would have been so first registered as aforesaid under the Act as in force in Northern Ireland:



(i) not exceeding 6 horse-power … … … … …… … … …
51·00


(ii) exceeding 6 horse-power but not exceeding 9 horse-power—for each unit or part of a unit of horse-power… … … … … … …
8·50


2. Other vehicles… … … … … … … … … … … … …
85·00

(2) In sections 2(1)(c) of the Act of 1971 and 2(1)(d) of the Act of 1972 (seven day licences for certain vehicles), for subparagraphs (i) and (ii), there shall be substitute—

"(i) in respect of which duty is chargeable by reference to an annual rate applicable to haulage vehicles in accordance with the second and third categories in Part II of Schedule 3 to this Act or applicable to goods vehicles in accordance with Schedule 4 to this Act: and
(ii) the unladen weight of which exceeds 11,176·5 kilogrammes;".

(3) In subsection (5) of section 16 of the Act of 1971 (rates of duty for trade licences), including that subsection as set out in paragraph 12 of Part I of Schedule 7 to that Act, for "£40" and "£8" there shall be substituted, respectively, "£42" and "£8·50".
(4) In subsection (6) of section 16 of the Act 1972 (rates of duty for trade licences), including that subsection as set out in paragraph 12 of Part I of Schedule 9 to that Act, for "£40" and "a" there shall be substituted, respectively, "£42" and "£8·50".
(5) In Part I of Schedule 4 to the Acts of 1971 and 1972 (annual rates of duty on goods vehicles)—

(a) in paragraph 1(1), for "£170" there shall be substituted "£150";
(b) in paragraph 2, for "£360" there shall be substituted "£320";
(c) in paragraph 5, in sub-paragraph (3)(b), for "32 tonnes" and "32·52 tonnes" there shall be substituted, respectively, "37 tonnes" and "38 tonnes";
(d) in paragraph 6—

(i) in sub-paragraph (1), for "£60" there shall be substituted "£63";
(ii) in sub-paragraph (2)(a), for "£100" there shall be substituted "£90";
(iii) in sub-paragraph (2)(b), for "£130" there shall be substituted "£115";
(iv) in sub-paragraph (4) for "£100" there shall be substituted "£90";

(e) in paragraph 7, for "£80" there shall be substituted "£85"; and
(f) after paragraph 14 there shall be inserted the paragraphs set out below.

PARAGRAPHS INSERTED AFTER PARAGRAPH 14 OF SCHEDULE 4 TO ACT OF 1971 AND ACT OF 1972

Tractor units having two axles used with semi-trailers having two axles when duty paid by reference to use with semitrailers having not less than three axles

14A.—(1) This paragraph applies in any case where—

(a) a vehicle has been taken out for a tractor unit having two axles which is to be used only with semi-trailers with not less than three axles; and
(b) the rate of duty paid on taking out the licence is equal to or exceeds the rate of duty applicable to a tractor unit having two axles—

(i) which has a plated train weight equal to the maximum laden weight at which a tractor unit having two axles may lawfully be used in Great Britain with a semi-trailer with two axles; and
(ii) which is to be used with semi-trailers with not less than two axles.

(2) If, in a case to which this paragraph applies, the tractor unit is used with a semi-trailer with two axles and, when so used, the laden weight of the tractor unit and the semi-trailer taken together does not exceed the maximum laden weight mentioned in sub-paragraph (1)(b)(i) above, the tractor unit shall, when so used, be taken to be licensed in accordance with the requirements of this Act.

Tractor units having three or more axles used with semi-trailers having only one axle when duty paid by reference to use with semi-trailers having more than one axle

14B.—(1) this paragraph applies in any case where—

(a) a vehicle licence has been taken out for a tractor unit having three or more axles which is to be used only with semi-trailers with not less than two axles; and(b) the rate of duty paid on taking out the licence is equal to or exceeds the rate of duty applicable to a tractor unit having three or more axles—

(i) which has a plated train weight equal to the maximum weight at which a tractor unit having three or more axles may lawfully he used in Great Britain with a semi-trailer with a single axle; and
(ii) which is to be used with semi-trailers with any number of axles.

(2) If, in a case to which this paragraph applies, the tractor unit with a semi-trailer with a single axle and, when so used, the laden weight of the tractor unit and semi-trailer taken together does not exceed the maximum laden weight mentioned in subparagraph (1)(b)(i) above, the tractor unit shall, when so used, be taken to be licensed in accordance with the requirements of this Act.
(6) In paragraph 5(1) of Part I of Schedule 4 to the Act of 1971 (special types of vehicles) for the words from "vehicle—" to "(c)" there shall be substituted "vehicle (other than, in the case


of a vehicle falling within paragraph (a) below, one of a prescribed class) which has an unladen weight exceeding 1,525 kilograms; and

(a) which has, for the purposes of this Schedule, a plated gross weight or plated train weight by virtue only of paragraph 9(2A)(c) below; or
(b) ".

(7) for paragraph 5(1) of Part I of Schedule 4 to the Act of 1972 (special types of vehicles) there shall be substituted the following paragraph—
(1) This paragraph applies to a goods vehicle

(a) which has an unladen weight exceeding 1,525 kilograms; and
(b) which is for the time being authorised for use on roads by virtue of an order under Article 29(3) of the Road Traffic (Northern Ireland) Order 1981 (authorisation of special vehicles).".

(8) In paragraph 9 of Part I of Schedule 4 to the Act of 1971 (plated and unladen weights)—

(a) in sub-paragraph (1)(a), for the words from "plated weight" to "Act 1972" there shall be substituted the word "weight" and at the end there shall be inserted the words "as indicated on the appropriate plate";
(b) in sub-paragraph (1)(b), for the words "a plated gross weight" there shall be substituted the words "such a plate"; and
(c) in sub-paragraph (2), for the words from "plated weight" to "Part II" there shall be substituted the word "weight" and at the end there shall be inserted the words "as indicated on the appropriate plate".

(9) In the said paragraph 9 there shall be inserted, after subparagraph (2), the following sub-paragraph—
(2A) In this paragraph 'appropriate plate', in relation to a vehicle or trailer, means—

(a) where a Ministry plate (within the meaning of regulations made under section 40 or 45 of the Road Traffic Act 1972) has been issued, or has effect as if issued for the vehicle or trailer following the issue or amendment of a plating certificate (within the meaning of Part II of that Act), that plate;
(b) where paragraph (a) does not apply, but such a certificate is in force for the vehicle or trailer, that certificate; and
(c) where neither paragraph (a) nor paragraph (b) above applies but the vehicle or trailer is equipped with a plate in accordance with regulations made under section 40 of the Act of 1972, that plate."

(10) The provisions set out in this resolution as be iii. substituted for provisions of Schedule 4 to the Act of 1972 shal I have effect in that Act with the substitution for any reference to a plated gross weight of a reference to a relevant maximum weight and for any reference to a plated train weight of a reference to a relevant maximum train weight.
(11) Paragraphs (1) to (10) above apply in relation to licences taken out after 15 March 1983.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

11. VALUE ADDED TAX (DISCRETIONARY REGISTRATION)

Motion made, and Question.
That provision may be made as to discretionary registration under Part I of the Finance Act 1972.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

12. INCOME TAX (CHARGE AND RATES FOR 1983-84)

Motion made, and Question,
That—
(1) Income tax for the year 1983-84 shall be charged at the basic rate of 30 per cent. and—

(a) in respect of so much of an individual's total income as exceeds £14,600 at such higher rates as are specified in the Table below; and
(b) in respect of so much of the investment income included in an individual's total income as exceeds £7,100 at the additional rate of 15 per cent.

Table


Part of excess over £14,600
Higher rate


The first £2,600
40 per cent.


The next £4,600
45 per cent.


The next £7,100
50 per cent.


The next £7,100
55 per cent.


The remainder
60 per cent.

(2) Section 24(4) of the Finance Act 1980 (increase of basic rate limit, higher rate bands and investment income threshold) shall not apply for the year 1983-84.
(3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 11 May 1983.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

13. INCOME TAX (PERSONAL RELIEFS)

Motion made, and Question,

That—

(1) Section 24(5) of the Finance Act 1980 (increase of personal reliefs) shall not apply for the year 1983-84.
(2) In section 8 of the Income and Corporation Taxes Act 1970 (personal reliefs)—

(a) in subsection (1)(a) (married) for "£2,445" there shall be substituted "£2,795";
(b) in subsection (1)(b) (single) and (2) (wife's earned income relief) for "£1,565" there shall be substituted "£1,785";
(c) in subsection (1A) (age allowance) for "£3,295" and "£2,070" there shall be substituted "£3,755" and "£2,360" respectively;
(d) in subsection (1B) (income limit for age allowance) for "£6,700" there shall be substituted "£7,600".

(3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation taxes Act 1970 (pay as you earn) before 11 May 1983.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing order No. 94 (Ways and Means motions), and agree to.

14. INCOME TAX (WIDOW'S BEREAVEMENT ALLOWANCE)

Motion made, and Question,
That—

(1) In section 15A of the Income and Corporation Taxes Act 1970 (widow's bereavement allowance) for the words "for that year" there shall be substituted the following paragraphs—

"(a) for that year of assessment, and
(b) unless she marries again before the beginning of it, for the next following year of assessment".

(2) In section 36(8)(b)(i) of the Finance Act 1976 (deductions which are not transferable between husband and wife) for the words "and 14" there shall be substituted the words "14 and 15A".
(3) Paragraph (1) above has effect in any case where the widow's bereavement occurred or ocurs in the year 1982-83 or in any subsequent year of assessment and paragraph (2) above has effect for the year 1983-84 and subsequent years of assessment.
(4) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as your earn) before 11 May 1983.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect inder the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

15. RELIEF FOR INTEREST (LIMIT FOR 1983–84)

Motion made, and Question,

That, for the year 1983–84—

(1) The limit imposed by paragraph 5 of Schedule 1 to the Finance Act 1974 shall, subject to any reduction to be made under that paragraph, be £30,000 and, accordingly, for any reference in sub-paragraph (1) of that paragraph to £25,000 there shall be substituted a reference to £30,000.
(2) For any reference in paragraph 24(3) of that Schedule to £25,000 there shall be substituted a reference to £30,000.
(3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 11 May 1983.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

16. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1982)

Motion made, and Question,

That corporation tax shall be charged for the financial year 1982 at the rate of 52 per cent.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions)

17. ADVANCE CORPORATION TAX (RATE FOR FINANCIAL YEAR 1983)

Motion made, and Question,

That the rate of advance corporation tax for the financial year 1983 shall be three-sevenths.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motion), and agreed to.

18. CORPORATION TAX (SMALL COMPANIES)

Motion made, and Question,

That—

(a) the small companies rate for the financial year 1982 shall be 38 per cent.; and
(b) the fraction by reference to which corporation tax charged on income is reduced under section 95(2) of the Finance Act 1972 shall for that financial year be seven two-hundredths.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

19. ASSIGNED LIFE POLICIES AND ANNUITY CONTRACTS

Motion made, and Question,

That charges to income tax may be imposed by provisions about life policies and annuity contracts, the rights conferred by which are or have at any time been assigned for money or money's worth—[Sir Geoffrey Howe.]

put forwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

20. BENEFITS IN KIND

Motion made, and Question,

That charges to income tax may be imposed by provisions relating to—

(a) the application of Chapter II of Part III of the Finance Act 1976 to scholarship income; and
(b) loans obtained by reason of a person's employment—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

21. PAY As You EARN (NON-DEDUCTED SUMS)

Motion made, and Question,

That charges to income tax may be imposed by provisions relating to tax required to he deducted under section 204 of the Income and Corporation Taxes Act 1970.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

22. PROFIT SHARING SCHEMES (INCREASE OF MAXIMUM SHARE APPROPRIATION

Motion made, and Question

That in Chapter III of Part HI of the Finance Act 1978 (approved profit sharing schemes)—

(a) with respect to shares appropriated on or after 6th April 1983, subsections (1) and (2) of section 58 (shares in excess of initial market value of £1,250) shall have effect as if for "£1,250" there were substituted "the relevant amount";
(b) with effect from 6th April 1983, paragraph 1(4) of Schedule 9 (maximum initial market value of shares appropriated to one participant yearly) shall have effect as if for "£1,250" there were substituted "the relevant amount"; and
(c) "the relevant amount" referred to in paragraphs (a) and (b) above shall be, in relation to a participant, an amount which is not less than £1,250 and not more than £5,000 but which, subject to that, is 10 per cent. of his salary for the year of assessment in question or the preceding year of assessment, whichever is the greater; and, for this purpose, a participant's salary for a year of assessment shall mean such of the emoluments of the office or employment by virtue of which he is entitled to participate in the scheme as are liable to be paid in that year under deduction of tax pursuant to section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) after deducting therefrom amounts included by virtue of Chapter II of Part III of the Finance Act 1976 (benefits derived by directors and others from their employment).

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

23. PROFIT SHARING SCHEMES AND SHARE OPTION SCHEMES (APPROVAL)

Motion made, and Question,

That provision may be made for varying the conditions for giving approval to, and withdrawing approval from, schemes under Schedule 9 to the Finance Act 1978 (profit sharing schemes) and Schedule 10 to the Finance Act 1980 (savings-related share option schemes).—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

24. RELIEF FOR INVESTMENT IN CORPORATE TRADES

Motion made, and Question.

That provision may be made with respect to relief from income tax under Chapter II of Part IV of the Finance Act 1981.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

25. GROUP RELIEF

Motion made, and Question,

That charges to corporation tax may be imposed by amendments relating to group relief.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

26. CAPITAL ALLOWANCES FOR DWELLING-HOUSES LET ON ASSURED TENANCIES

Motion made, and Question,

That charges to income tax, corporation tax and capital gains tax may be made by provisions relating to allowances under Schedule 12 to the Finance Act 1982.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 24 (Ways and Means motions), and agreed to.

27. CAPITAL GAINS

Motion made, and Question,

That charges to capital gains tax and corporation tax may be imposed by provisions—

(a) repealing sections 6, 8 and 9 of the Capital Gains Tax Act 1979;
(b) relating to the case where a person becomes absolutely entitled to settled property as against trustees who are neither resident nor ordinarily resident in the United Kingdom;
(c) relating to the meanings of "settlement", "settlor" and "settled property" for the purposes of sections 80 to 84 of the Finance Act 1981; and
(d) with respect to disposals after 31 March 1982, enabling elections to be made that certain holdings of securities of the same class shall be treated as single assets.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

28. CAPITAL TRANSFER TAX (BURDEN OF TAX AND PAYMENT BY INSTALMENTS)

Motion made, and Question,

That charges to capital transfer tax may be imposed by provisions relating to—

(a) the burden of capital transfer tax on the value transferred by a chargeable transfer made on death; and
(b) the payment of tax by instalments.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), agreed to.

29. OIL TAXATION (RECEIPTS DERIVED FROM, AND EXPENDITURE IN CONNECTION WITH, CERTAIN ASSETS)

Motion made, and Question,

That provision may be made for bringing into charge to petroleum revenue tax certain sums received or receivable after 30th June 1982 in respect of assets used in connection with oil fields and for altering the reliefs available for certain expenditure incurred in connection with such assets.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), agreed to.

30. OIL TAXATION (ABORTIVE EXPLORATION EXPENDITURE)

Motion made, and Question,

That provision may be for the replacement, with respect to expenditure incurred after 15 March 1983, of the allowance under section 5 of the Oil Taxation Act 1975 in respect of abortive exploration expenditure and for the recovery of excess allowances given in respect of such expenditure.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), agreed to.

31. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)

Motion made, and Question,

That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from tax.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

31. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)

Motion made, and Question,

That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from tax.—[Sir Geoffrey Howe.]

Put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

PROCEDURE (INTEREST RATES FOR NATIONAL LOANS FUND)

Motion made, and Question,

That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in a Finance Bill, any Finance Bill of the present Session may contain provisions relating to the rates of interest applicable to loans made out of the National Loans Fund.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

PROCEDURE (NEW TOWN DEVELOPMENT LOANS)

Motion made, and Question,

That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, and Finance Bill of the present Session may contain provision relating to the suspension of payments into the National Loans Fund, being payments by way of repayment of or interest on sums advanced to development corporations for new towns and the Development Board for Rural Wales.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

PROCEDURE (FUTURE TAXATION)

Motion made, and Question,

That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be inlcuded in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

(a) provisions relating to dwellings occupied by directors and employees by reason of their employment;
(b) provisions imposing charges to corporation tax on companies resident in the United Kingdom which have interests in certain companies which are not so resident;
(c) provisions relating to advance corporation tax;
(d) provisions relating to expenditure on the production and acquisition of films, tapes and discs;
(e) provisions relating to expenditure on teletext receivers and adaptors;
(f) provisions relating to deferment of liability for development land tax by virtue of section 19A of the Development Land Tax Act 1976;
(g) provisions relating to the surcharge imposed by the National Insurance Surcharge Act 1976.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

FINANCE [MONEY]

Queen's Recommendation having been signified—

Motion made, and Question

That, for the purpose of any Act of the present Session relating to finance, it is expedient to authorize—

(a) any increase in the sums to be issued out of the National Loans Fund with recourse to the Consolidated Fund which is attributable to any provision of that Act enabling the Treasury to pay supplements in respect of sums borrowed on terms set out in the prospectus for Save As You Earn Savings Contracts (Third Issue) or in the prospectus for Index-Linked National Savings Certificates Retirement Issue;
(b) provision for suspending payments by way of repayment of or interest on sums—

(i) falling within section 60(a) of the New Towns Act 1981 or borrowed by the Development Board for Rural Wales under Section 9(2)(a) of the Development of Rural Wales Act 1976 for the purposes of the Board's function in respect of the development of new towns;
(ii) specified by the Treasury; and
(iii) not exceeding in aggregate £1,250 million; and for suspending the accrual of interest in respect of such sums.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

Bill ordered to be brought in upon the foregoing resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Leon Brittan, Mr. Nicholas Ridley, Mr. Jock Bruce-Gardyne, Mr. John Wakeham and Mr. Barney Hayhoe.

FINANCE

Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance, presented accordingly by Mr. Jock Bruce-Gardyne and read the First time; to be read a Second time tomorrow and to be printed. [Bill 113.]

SOCIAL SECURITY

Resolved,
That the draft Social Security (Contributions) Amendment (No. 3) Regulations 1983, which were laid before this House on 25th February, be approved.—[Mr. Rossi.]

Court of Auditors (Report)

The Financial Secretary to the Treasury (Mr. Nicholas Ridley): I beg to move,
That this House takes note of the Annual Report from the Court of Auditors concerning the financial year 1981, together with replies from the Institutions (Official Journal of the European Communities C344 dated 31st December 1982) and supports the Government in seeking to ensure the sound management of Community finance.
In its 11th report, issued at the end of last month relating to the year 1981, the Select Committee on European Legislation &c. concluded that the Court of Auditors' report was an objective survey of the administration of spending under the Community budget and that it represented a regular and valuable opportunity for parliamentary appraisal. The Government share that view.
Last year was the first time that the House had a separate debate on the Court of Auditors' report, but, unlike last year, I regret that it has not proved possible to hold this debate before we had to consider the report in the Council. We might have been able to discuss it during our debate on the Community budget on 21 February, but at that stage the Select Committee had not considered the report. Since the recommendation for debate, parliamentary timetable pressures have not allowed discussion before this evening. I shall arrange for any additional comments that arise today to be taken into account in our day-to-day contacts with the Community.
As the House will remember, in the Treasury minute on the fifth report of the Public Accounts Committee, Session 1981–82, the Government noted the views of the Public Accounts Committee and its recommendation that the Government should press for greater attention to be given to the reports of the Court of Auditors.
Subsequent to the publication of the PAC's fifth report, the House debated the Court of Auditors' report on the year 1980, almost exactly a year ago today. I then confirmed that the Government would pursue questions raised by the court through the Commission or the European Parliament. This we have done.
We are not seeking just to highlight the court's annual report; we are taking steps to ensure that a full consideration is given to the court's periodic special reports. By doing so I believe that we are taking a further step towards ensuring value for money from the Community budget. I am sure that we have the support of the whole House for this.
Last year I also reminded the House of the procedures leading to the publication of these annual reports and their subsequent consideration. The procedures are laid down in the treaty and amplified by more detailed rules in the financial regulations. I am sure that I need not cover this ground again this year, but if hon. Members have any questions about the drill, I shall be happy to try to answer them.
I should remind the House that the European Parliament is required to give a discharge to the Commission for its implementation of the 1981 budget, acting on a recommendation by the Council, before 30 April 1983. The German presidency has done its best within the tight timetable to enable the Council's recommendation to be


given early enough to allow the Parliament a little time in which to consider the Council's recommendations and formulate its discharge document.
The Government had hoped to take advantage of the current review of the financial regulation to secure a less tight timetable. Unfortunately, detailed discussion of these matters in the Council has not yet begun, because the opinion of the European Parliament is still awaited. When we have the Parliament's views, the Government intend to return to the attack to achieve an improved timetable.
The report before the House is detailed and long and raises a large number of issues. As was noted in the court's report on 1980, there is a greater emphasis by the court on value for money, in addition to concern about financial regularity in the making of, and accounting for, payments. The court certainly sees its role developing in that way. The Government have generally taken a fairly restrictive view of the need for increased expenditure on administration and personnel within the Community, but we have consistently supported the need to pay the cost of the court's using qualified auditing staff.
As for the substance of the annual report and the 1981 accounts, including the Commission's response, the English version of the draft Council recommendation arrived from Brussels only today, but copies have been deposited in the Vote Office and an explanatory memorandum will be submitted to the Scrutiny Committee for consideration.
In the main, the Council confined its recommendations, with which the Government agree, to points on which it considered that the Commission had not dealt adequately with the court's observations. The Council is concerned about the rate of utilisation of funds available in the Community budget. It therefore stresses the need to exercise care in entering in the Community budget only such sums as are likely to be spent.
I refer to underspending on development aid in particular. It is specifically covered in the 11th report of the Select Committee on European Legislation &c. The Committee is concerned about the inadequate management of the Community's programme. Only about two-thirds of the sum available in the budget was spent in 1981. The underspending was worse than in 1980 and worse than in any other area of the budget. The Council's recommendations urge the Commission to take action on that matter. The Council recognises that any delay in the adoption of the Community's annual aid programme has a direct influence on the rate of implementation. It has, therefore, invited the Commission to accelerate the presentation of its proposals to enable decisions to be made earlier.
I do not propose to take up more time listing the Council's comments. This is more an occasion for the House to express its views on financial management and control in the Community. With the leave of the House, I shall respond to points made in the debate, but the House will understand that I cannot answer for the outcome of the report. The final responsibility for giving a discharge to the Commission on the accounts lies with the European Parliament. Implementation lies with the Commission.
However, I assure the House that the Government will take what action they can on points raised by hon. Members in the debate and will continue to take every

opportunity to support the Court of Auditors in its efforts to ensure sound financial management and value for money.

Mr. Jack Straw: When the Court of Auditors' annual report for 1980 was discussed on 4 March last year, the Financial Secretary to the Treasury told the House that the Government agreed with the Scrutiny Committee about the importance to be attached to this subject.
Last year's debate took place in the early evening—a time appropriate to its importance. It is a matter of regret that the report should come before us after it has been discussed by the Council of Ministers, so that there is no formal way in which the comments of the House can be taken into account by the Council, and that it should come before us at the fag end of the day, when there is inadequate opportunity for hon. Members to debate it as it should be debated and inadequate opportunity for the press to give it the attention that it deserves.
The Court of Auditors is potentially one of the most important institutions of the Common Market. While the other institutions, especially the Commission and, I am afraid, the assembly, often appear to be dedicated to policies that waste public money on a stupendous scale, the Court of Auditors is the one body that should stand up for the taxpayer and try to ensure that our money—the British public's money as well as the money of the public of the other Common Market countries—is spent properly, if not wisely. Given the size and complexity of the Common Market institutions and the inadequate resources of the court, it is a Herculean task, with which it has only just began to grapple.
The Financial Secretary said that the report was fairly complex. That is true. It is also a most alarming read. I have read the whole document. I read it with mounting alarm and shame that institutions with which this country and Her Majesty's Government are associated could be administered in such an unacceptable way. The report discloses a degree of inefficiency, incompetence and fraud by Common Market institutions that would not be tolerated for a single day in the worst-run town hall or Civil Service office in the United Kingdom.

Mr. Tony Marlow: Does the hon. Gentleman exclude Lambeth and tile Greater London Council from that?

Mr. Straw: I would not exclude a single local authority from that comment. There is no local authority, Government Department, company or whelk stall in the British Isles that could be run as badly as the Common Market's institutions.

Mr. Richard Body: Does the hon. Gentleman agree that at least the electors in Lambeth have some redress, whereas in the Community we do not have redress?

Mr. Straw: I entirely agree with the hon. Gentleman. That is another point. The only redress that the British public have is indirect redress through the so-called European Parliament. One of the chief culprits in terms of mis-spending of the public's money turns out, according to the report, to be the very European assembly that is supposed to be the watchdog of the expenditure of moneys in the Common Market.
Lest hon. Members think that I am exaggerating when I accuse the Common Market of inefficiency, incompetence and fraud on the basis of the report, I shall take hon. Members through a few of the comments that are made in it. On page 12, the report starts with the bald statement that
The presentation of the balance sheet as at 31 December 1981 is not satisfactory.
We are told that with regard to the Commission
The bank reconciliations were made too late for the operations to be presented correctly. This has created certain anomalies and irregularities.
We are then told than an entry of 4·2 million ECU, which is the equivalent of about £3 million,
correcting a difference in the ECSC account is without documentary justification.
In other words, £3 million has gone missing. On page 15 we are referred to the holiday camps account. We are told that
The 'holiday camps' account, in which expenditure to be recovered from officials is entered, is not properly monitored".
A sum of £13,000 included in the balance of that account remains unexplained. We are told that
recovery of the amounts advanced to officials takes far too long".
I could not believe that in the body of a report about the Common Market there was an entry about holiday camps. I discovered that it is part of the many benefits that Common Market bureaucrats receive—no doubt the leader of the Social Democratic party received that benefit when he was there. The holidays of bureaucrats' children can be paid for by the Common Market—by the British and European taxpayer. They pay the money back later, if the Common Market accounting bodies are lucky. However, £13,000 of the holiday camps account has gone missing and remains to be collected.
I come now to revenue. We find that the Commission, without any authority, waived £19 million on the late payment of own resources, of value added tax and such like by member countries. On page 19 we are told that
Extensive frauds have occurred in the meat sector in the Netherlands following insufficient control measures.
Long-running frauds have taken place through the manipulation of monetary compensation amounts. They are discussed on page 35. We find that there has been no satisfactory resolution to the merry-go-round of pigs and cattle across the Northern Irish border. We are told that
the Community has up to now not been able to take appropriate special legislative measures to exclude any possibility of fraudulent profit.
In other words, the possibility for fraudulent profits from the merry-go-round of pigs going across the Northern Irish border is unchecked.
On page 39 there is a simple reference to the fact that the Common Market has no idea how much food aid Poland cost during 1981. That is because no budgetary statement for that aid was ever established. The prose of the document states:
Since, however, the financing mechanisms of the common agricultural policy were used for these operations but no special budget headings were created, further investigation will be necessary.
I am sure that all hon. Members were in favour of giving food aid to Poland, but we would all like to know how much it cost. The fact is that none of us can know.
We also learn about the repair of earthquake damage in Venezia Giulia in Italy. At the end of page 52 there is the quaint reference to the fact that
The terms 'restoration' and 'improvement' have sometimes been applied"—

by the Italian Government—
very freely, some of the projects financed (particularly the construction of cheese-processing plants) appearing to be mainly for new types of plant.
In other words, we find that earthquake relief moneys have been used for the construction of entirely new cheese-processing plants in Italy.
In chapter 8 on research, energy and industry, there is a continuing saga of research projects that are quite out of control, particularly the JRC Ispra project in Italy. We then come, as did the Financial Secretary, to the management of the Common Market's aid budget. The Opposition have given great support to the encouragement of additional aid to the developing countries, and nothing that I say should be seen as derogating from that encouragement. However, it is important. for the developing countries as well as the taxpayer, that there should be some certainty that when a Common Market institution decides to grant aid to a particular country, the money is applied for that purpose. But on page 78 we find that
Considerable amounts of budget appropriations'—
which together total almost £700 million—
cannot be audited by the Court of Auditors.
There are no vouchers or sufficient accounts to audit a good proportion of that £700 million.
As evidence of incompetence, we find on page 83 that there are enormous physical losses of skimmed milk powder simply because the Common Market cannot ensure that it is put in bags that hold together when the powder is transported over rough roads. The standard for those bags has been drawn up and a quality description has been laid down, but they are not used. Instead, weaker bags which break are used. The Community also uses the wrong size of tin for butter oil, despite the fact that the tin that has been recommended has on numerous occasions been found in practice to be more durable.
These simple lessons of packaging, which even the British Army got together three centuries ago, have not been learnt by the Common Market, and as a result good food is going to waste when it is shipped to developing countries.
Perhaps the most worrying aspect of the report concerns the self-serving way in which the staff of the EC use the money of European taxpayers for their own benefit. Chapters 10 and 11, on staff expenditure and operational expenditure, are hair-raising by any standards. If directors of companies ran operations in a similar way, their companies would be compulsorily wound up and they would find themselves in court for a fraud on their shareholders.

Mr. Teddy Taylor: They could find themselves in prison.

Mr. Straw: Chapter 10 starts with the announcement that
There are a number of weaknesses in the system of payment of remunerations at the European Parliament, with the result that the relevant legal requirements are not fulfilled.
That is the least of it. On page 97 we learn that
There is no comparison of the remunerations of successive months, including the effect of intervening changes, so as to establish that the most recent month's payment is correct.
In other words, there is no proper payroll system.
At the same time, there is no procedure to inform the authorizing departments that their financial decisions have been correctly applied. … The monthly payment of remunerations


takes place without the accounting officer having an authorization from the authorizing officer which has been first approved by the Financial Controller".
So the system lacks authority.
Page 98 describes a mind-blowing system of entertainment allowances not only for those who might have a marginal claim for such allowances but also for messengers and secretarial assistants. A skilled messenger received a service allowance of 12,000 Belgian francs a month. That is about £180. I do not wish to denigrate the skill of messengers, but to classify messengers as skilled employees may suggest a grade drift within the European Parliament that is unknown even to the British Civil Service. It taxes one's imagination to think exactly how a skilled messenger should be spending an entertainment allowance of 12,000 Belgian francs. It certainly taxed the imagination of the Court of Auditors. It states that
In the decisions of the appointing authority on these allowances, no grounds were given either for the choice of staff concerned or for the size of the sum granted to them.
Turning to operational expenditure, we find in paragraph 11.0.(a) that
Audit firms and engineers required by the Commission to inspect steel undertakings were engaged in breach of Article 32 of the Financial Regulation.
Hon. Members will remember that as part of the attempt by the European Commission to police the various quotas and ceilings on steel production, auditors were appointed from private practice by the European Commission. It appears that there was no authority to appoint those auditors and no proper system for checking their expenditure.
The coup de grace is found on page 104. It concerns the expenses and payment of those European bureaucrats who staff the delegations' press and information offices in the various member countries, including the United Kingdom. That is a gravy train that lacks any controls whatsoever. On page 104 we are told that
Neither the Commission nor the Parliament have so far drawn up statements of costs for each of their offices.
They have no budget. Then in paragraph 11·17.—this must make anyone's hair stand on end—we are told that
Both the Commission and the Parliament calculate and pay the monthly salaries of officials working in these offices through their central administration. No check is made of the number of officials actually employed against the number of salaries actually paid. The weakness in the system of internal control means that, for example, unjustified payments to non-existent officials could eventually not be discovered.
I shall read that again, because it is such an elementary error.
No check is made of the number of officials actually employed against the number of salaries actually paid.
Those free-loading offices in London, Edinburgh, Cardiff, and Dublin, and all over the EEC, are out of control. The auditors, the Commission and the Parliament that pays the salaries have no idea how many people are actually working and how many salaries are paid. For fraudulent abuse of taxpayers' money, it puts the Mickey Mouses and Donald Ducks of Fleet Street right in the shade.

Mr. Marlow: Is there not a risk that the money is being misapplied in strong propaganda campaigns in favour of perpetuating the activities about which the hon. Gentleman so rightly complains?

Mr. Straw: I agree entirely. There are the gravest risks. Although I have no direct evidence of slush funds

and money being laundered for purposes for which it was never intended, the financial controls of the Common Market are so lax that the opportunities for such practices are legion. That is well illustrated by the fact that, despite the length of time for which the EC and the offices involved have been operating, no check is made of the number of officials actually employed against the number of salaries actually paid. If one wanted to run a slush fund or an unofficial fund for propaganda, what could be easier than to add four or five names to the payroll, knowing that no check would be made?
The Dublin office obviously takes the prize for imaginative use of Common Market funds. Paragraph 11.19 states:
Throughout 1980 there were cases of irregularities in the calculation of overtime for all five local staff of the Commission office in Dublin. These could be discovered because at the end of this year four of the five employees purported to have worked exactly the same number of hours overtime.
It was found that this overtime had never been worked and that the payments for it were intended simply to raise the salaries of the local staff by illegal means.
Even more worrying, it is plain that the system of payment for unworked overtime was followed with the connivance and encouragement of the Commission in Brussels. It was not as though the local offices were doing something underhand and covering it up. They had the full encouragement of the Commission. The next paragraph states:
For 1981, the head of the Dublin office was informed in a letter from a senior official of the Directorate-General responsible … you can "distribute" 50 per cent. of the previous year's total however you wish among the different members of your staff.
In other words, a 50 per cent. bonus was offered to the staff of the Dublin office for no good reason other than that the Common Market bureaucrats were awash with money and wished to find some receptacle for it.
Anyone reading the report or hearing that horrifying catalogue of extracts from it will share our view that the finances of the Common Market are quite simply out of control. There is no question about it. Not only are thousands of pounds going into the pockets of European bureaucrats when they should not, but millions of pounds are being lost through inefficiency and fraud and the systems for identifying losses are wholly and woefully inadequate.
What is especially worrying in these circumstances is not just the facts of the incompetence, inefficiency and fraud but the staggering complacency of the Commission and the assembly.

Mr. Bob Cryer: They are part of it.

Mr. Straw: Of course they are. Their comments at the back of the report suggest that officials in the Commission and the assembly are simply not bothered about this kind of leakage and fraud. It is no reassurance whatever to the House or to the British public to learn that the assembly has to give the discharge to the Commission for the expenditure because the assembly is as much implicated in the incompetence and fraud as the Commission and the Council.
The only people who can get a grip on the Common Market's finances while that teetering organisation still exists are members of the Council of Ministers. When the Financial Secretary to the Treasury replies, I hope that he will tell us rather more fully than he did in his opening speech what the Government will do to get a grip on what


is going on in the Common Market. What will they do about the extensive frauds that are even taking place within the borders of the United Kingdom through the manipulation of monetary compensatory amounts? What will they do about the scandal about the way in which nonexistent staff are being paid, staff are being paid salaries that they do not deserve, and so on? What will they do to ensure that there is a thorough overhaul—nothing less is needed—of the Common Market's financial system?
Chapter 14 of the report deals with the United Kingdom's contribution to the EC budget and the rebate that we have received. I am confused about the net payment that the British Government had to make in 1981—the year covered by the report—and subsequent years. In last year's public expenditure White Paper, Cmnd. 8494, we are told in paragraph 26 that net payments, excluding overseas aid, come to £60 million in 1981–82 and that it was £520 in the following financial year. In this year's White Paper, Cmnd 8789, the £60 million appears to have increased to £157 million and the £520 million appears to have increased to £616 million. I should be glad to know whether the figures in this year's White Paper are regarded as final or whether there will be another upward adjustment to the size of our contribution in those two years and the size of the expected contribution in 1983.
The report raises many serious questions about the running of the Common Market. The British Government, like the Governments of the other nine member countries, have it within their power to change the way in which the money of the taxpayers of Europe is spent. I hope that the Financial Secretary to the Treasury will say that, at long last, the Government will get a grip on the scandalous waste that is taking place every day in the EC.

Mr. Tom Normanton: When I put in an appearance at debates of this type, I ask myself where, in heaven's name, some of the participants have been in the past 10 years. It is a tragedy that the Opposition have never established—indeed, they have failed ignominiously to establish—any relationship with their representatives in the European Parliament. Therefore, they are lamentably in the dark. Perhaps they have chosen to be so on this important subject, but it contrasts strongly with the stance adopted by my right hon. Friend when he introduced the report. He did so objectively, calmly, with much confidence, while retaining a critical awareness of what the report contains.
The speech of the hon. Member for Blackburn (Mr. Straw) implied that those who criticise the European Parliament, the Commission and the institutions of the Community are just as fully aware of what happens in governmental institutions in Britain as they claim to be by reading reports such as this. The tragedy is that right hon. and hon. Members are lamentably in the dark on points such as those brought out so succinctly and clearly in this report. But the fact that those points are presented for us to read is in itself the biggest commendation for the report.
There are and always will be areas of public expenditure that introduce new policies and problems, and lessons must be learnt from the experience gained from such new developments. Several have been mentioned in the report, which is already under scrutiny by the budgetary control committee of the European Parliament.

The House still does not recognise the importance of that fact, but we can draw upon this experience and learn from it how we can better manage governmental expenditure.

Mr. Marlow: Perhaps I may take my hon. Friend back to his first point. Would he care to expand it by saying that he believes that the waste of money, fraud and lack of proper accounting in this country is nothing like that which takes place in the European Community at the moment, or is that not the point that he was trying to make?

Mr. Normanton: The answer is simple. I do not know. I suggest that no hon. Member has access to information that would give him the slightest ground for saying yes or no to my hon. Friend's question.
Will my right hon. Friend the Financial Secretary to the Treasury bring greater pressure to bear for the further budgetisation funds that are not at present included in the Community budget? The report states that there are five European development funds for aid to third countries, but they are not budgeted in the same way as the expenditure of the Commission, the Parliament and the Council of Ministers. My right hon. Friend should bring further persuasive powers to bear on the Council of Ministers, because if the funds are budgeted differently hon. Members and those who serve in the European Parliament from our respective parties can better make decisions on the greater effectiveness of expenditure by the Community.
In the five reports published by the Court of Auditors, we have seen repeated references to underspending. The evidence of underspending of money that has been firmly allocated and written into the Community's budget should cause no satisfaction. In some cases the fault—I have personal experience of this—lies in the machinery for reaching a legal basis for approving projects after the making up and during the implementation of the annual budget. There is a wide gap between what the Commission and the Parliament believe should be spent and the authorising mechanism for individual projects. I hope that my right hon. Friend the Financial Secretary will take that point on board.
There are a number of other points. I shall not respond to those that have been put by the Opposition Front Bench, because they were good, parliamentary, knock-about stuff, clearly showing a lamentable lack of awareness and, worst of all, a lack of awareness of how we, in our local and national Government, account for our money.

Mr. John Roper: I pay tribute to the hon. Member for Birmingham, Erdington (Mr. Silverman) and the Select Committee on European Legislation &c. for reporting this document to the House, because it has provided us with an opportunity to have yet another debate in the annual round of debates on Community matters. I agree with the hon. Member for Blackburn (Mr. Straw) that it is regrettable that the debate should be taking place so late. There have been three Divisions tonight. Therefore, the debate started even later than usual.
I think that I am right in saying—I shall be corrected by those who know more of the activities of other Parliaments in the Community—that ours is the only Parliament in the Community that has such a debate on the annual report of the Court of Auditors. It is important, because, although we are not shareholders in the


Community, we are representatives of the members of the Community just as much as the European Parliament is. Therefore, it is right that we should make our views known to our Government, who have a place in the Council of Ministers and can improve the way that the Court of Auditors and the Community institutions function in relation to the proper management of their accounts.
It is welcome to note, as the Select Committee noted in its report, that the procedure for the way that the Court of Auditors works has evolved over the past two years by a more informal exchange between the court and the various Community institutions during the process of the audit. It would be useful to get an idea as to the extent to which the court feels that the accounting processes of the Community have improved from year to year.
The court is one of the most valuable of the Community's institutions. As we can see from the report, it has an important function, because an institution that covers a large number of countries and is developing all the time itself is liable to have untidinesses in its financial procedures.
I may have said this last year, but annex III to the document—the financial information, with its diagrams—is one of the clearest and most effective explanations of the Community's budget. I am glad that this year, unlike last year, I was able to get a coloured copy. The annex is a clear and useful exposition of the Community's budget. It is as valuable to those who are in favour of Britain's membership of the Community as it is to its opponents.
The hon. Member for Blackburn will not be surprised if I tell the House that I found some of his remarks somewhat exaggerated. As in previous years, although he made a cursory reference to annex IV and to the responses by the Parliament and the Commission, in the introductory part of his speech, when he selectively quoted from the report, he did not reference the specific criticisms that he made to the replies made by the appropriate Community institutions in the section from page 125 onwards.

Mr. Straw: The hon. Gentleman is right, but I read annex IV carefully in preparing my speech, and in every case I checked what was said by the Court of Auditors with what the Commission or assembly said in reply. That led me to make the judgment that the approach of the Commission and the assembly was extremely complacent. While they may have taken action in two cases, they are far too relaxed, given the scale of inefficiency and incompetence disclosed earlier in the report.

Mr. Roper: I am glad to hear that the hon. Gentleman has worked through them. The hon. Gentleman had serious criticism to make of the Commission and the Parliament. The annex contains fairly satisfactory replies, or, if not satisfactory, replies that should be taken into account in making criticisms of the Community's operations.
The hon. Gentleman referred to aid in the form of beef given to Poland. In its response, the Commission said that it acted at that speed on the instructions of the budgetary authority—the Council of Ministers. It is hard to blame the Commission when it was told that it should get the beef to Poland as quickly as possible for political reasons.

Mr. Straw: It is surely not beyond the wit of man, quickly and speedily, to set up an accounting system to enable the Commission to know the amount of beef that was sent and its value.

Mr. Roper: The hon. Gentleman will see from the response that attempts are now being made to get that information. There are occasions when the Council of Ministers should give instructions for aid to be sent to Poland. The hon. Gentleman stated that the sending of aid was a good thing.
I wish to deal with the points effectively made by the hon. Gentleman on the Community's information operations, especially the delegation and information offices to which reference is made in paragraph 11.17 on page 104 of the report. In order to examine the criticism made by the hon. Gentleman about people being paid who were not employed, it is necessary to turn to paragraph 11.17 on page 204. One sees that what was clearly an unsatisfactory procedure has been resolved. The paragraph responds precisely to the criticisms made by the Court of Auditors. It states:
As of this year all officials and other staff are paid by the administrators of imprest accounts in each Office. These payments are checked at headquarters.
A justifiable criticism has therefore been remedied since the time of the report. That is the value of the Court of Auditors. It can draw attention to weaknesses. What is satisfactory is that the Community is then able to respond to those criticisms and make corrections. There are some matters, such as that in Dublin, that are unusual. Again, however, on page 204 it is stated that the director-general of information has been instructed to make the administrative investigations required into those matters.

Mr. Teddy Taylor: The hon. Gentleman said that the director-general "has been instructed". Will he say where that is detailed on page 204? If he "has been instructed", will he say by whom? I believe that what the hon. Gentleman stated is wrong. I think that he knew it was wrong.

Mr. Roper: I shall quote precisely. I quoted somewhat loosely. I shall give the exact words. The paragraph states:
The Director-General for Information is making the administrative investigations required by the Court's comments.
It will be interesting to see whether next year the Court of Auditors reports on what has happened. If it does not, I trust that the appropriate committee of the European Parliament, to which reference was made by the hon. Gentleman, will investigate this matter and ensure that a report is made on the subject. It is clear that matters of that type bring the Community into disrepute and provide ammunition for attacks by those who are less enthusiastic about British membership of the Community. It is right that these matters should be brought into the open and corrected, and the House should be told about the corrections when they have been made.
I wish to speak about the work of the European development fund, which was not dealt with in detail by the hon. Member for Blackburn. There are several worrying examples in that chapter of ways in which development aid was utilised. Although many hon. Members are in favour of the expansion of development aid, no one will be in favour of the misuse or abuse of development aid. This year, as last year, hon. Members can see that the Court of Auditors did a valuable job by criticising constructively the work of the European


development fund. Having read those criticisms—and they are not terribly encouraging—it is worth noting what the Court of Auditors says at the beginning of the section on the European development fund. Paragraph 15·3 states:
Notwithstanding the particular criticisms made below on certain projects, the court wishes to make it quite clear that, taken overall, the situation is satisfactory, and to stress the important contribution made by EDF to the development of the countries concerned.
It is important to recognise that the court, after carrying out a most detailed analysis and having, quite rightly, drawn attention to several specific and important criticisms of the work of the development fund—those are matters that I trust will be corrected next year or in the near future—states that overall a satisfactory job is being done and that the funds which go from Britain and the other nine countries of the Community to the European development fund are making an important contribution to the development of those countries.
This is an important debate. It is important for hon. Members to have a chance to examine the weaknesses in the operation of the Community and to draw some of them to the Government's attention. The Financial Secretary can no doubt pursue them in the Council of Ministers. I trust that in future such debates as this will take place not only earlier in the day but before the Council of Ministers has to recommend the discharge of the accounts.

Mr. Teddy Taylor: The Opposition spokesman, the hon. Member for Blackburn (Mr. Straw), said that he was sorry that this debate was taking place at this hour because the people of the country would not be listening to it and the press are not present. Having read this document, in detail, as has the hon. Gentleman, I am glad that we are having the debate at this time of night when the public are not aware of some of the scandalous irresponsibilities in spending by the so-called European assembly, by the Commission and by the EC structure. Quite frankly, if the public were fully aware of what is disclosed in this document, it would not just damage the Common Market and its institutions but it would do a grave disservice to the cause of democracy. What is contained in this document simply serves to give democracy a bad name.
My hon. Friend the Member for Cheadle (Mr. Normanton), in his astonishing speech, suggested that hon. Members should not pay too much attention to this document because, perhaps, the same things go on in our Departments and we do not know about them. How splendid it is that a court of auditors can examine these matters. Coming from my hon. Friend, whom I have regarded as a sensible person, that is a quite outrageous response when we are talking about public money. Surely we should be even more careful about looking after public money than we are with our own money. It can only be my hon. Friend's over-enthusiasm for the Common Market that has driven him to an astonishing justification of the unjustifiable.
The argument put forward by the hon. Member for Farnworth (Mr. Roper) was that we should not bother too much, because things have already been done. However, he should look at some of the points made, and at the so-called responses. For example, there was a statement about the astonishing bogus overtime payments that were made in 1980. That is three years ago. What is the response? The report states:

For 1981 the head of the Dublin office was informed in a letter from a senior official of the Director-General responsible"—
the director-general of information—
'you can "distribute" 50 per cent. of the previous year's total however you wish'".
What is the response? First, the Parliament says that that is not so much its business as that of the Commission. It is then stated that the director-general of information is making the administrative investigations required by the court's comments. That is the same bloke who said that those involved could do what they like in splashing out the money. That happened three years ago. It is not in any way a tolerable response, and something should be done.
There are some quite astonishing and scandalous reports. For example, among the separate national courts of auditors, the Netherlands Court of Auditors was worried about frauds in the meat sector. It carried out a special check. Page 26 states that
checks were made on 23 out of 45 firms involved and frauds were discovered in 17 cases, involving own resources estimated at between 4 and 4·5 million ECU.
That is about £2·5 million.
If hon. Members study the document as I have done, they will find that it reveals an appalling state of affairs. However, what worries me is that we had the same debate last year, and we expressed the same concern. By and large, the same hon. Members were present then as now. A small number of us say the same things to each other in much the same way.

Mr. Michael Latham: The same could happen next year.

Mr. Taylor: That is true. My right hon. Friend the Financial Secretary has a duty to tell us what the blazes we are to do. Let us consider the scandalous entertainment allowances for those who do not have to entertain. The European assembly's officials said that they just arrived at the decision in accordance with the rules. They did not seek to justify why messengers and secretarial assistants should receive huge entertainment allowances. Those involved do not try to justify it but just say that it was done in accordance with the rules.
However, we cannot allow such things to continue. What can be done? Instead of reciting the scandals year after year, we should ask seriously what can be done. Such scandalous activities would not go on in our Departments and in the Civil Service. If they did, they would be revealed and the Public Accounts Committee would talk about them. There is no possibility that the so-called European assembly will sort this out. Such things tend to become worse. We can see what is happening, because many Members of the European Parliament are clearly sickened by what is going on and want to leave its green pastures for this House. I am sure that they contemplate that because they are sick of the goings-on at the European assembly and want nothing more to do with it. Some of them have great ability and are very conscientious, and they obviously find this state of affairs sickening and an affront to democracy. However, they are powerless to sort it out. That is why they are trying to leave to come to this House.
What can we do? As a gesture of protest, we could contemplate withdrawing our representatives from that silly European assembly, in the hope that it might just fade away. I believe that, if it disappeared tomorrow, nobody would notice and we should probably do a major service


to democracy. I doubt whether that is practical, because the House of Commons has no authority to withdraw Members. Since direct elections were introduced we cannot simply say "We are withdrawing our deputation." That cannot be done.
Who will do something about this scandalous abuse of public money? That should interest not only people such as myself who have been critical of the EC from the start but supporters of it. They should be anxious to find a way of sorting out the problem.
The only way that the problem can be resolved is for the Council of Ministers to take the initiative and demand a thorough overhaul of the way in which the Community works. It will probably have to renegotiate the treaty to take from the assembly some of its authority to splash around money as it does now. The Government could start by conducting a special inquiry into the propaganda activities of all agencies in the European set-up.
We have just heard how the European democrats, which apparently involves some of our Conservative Members and some Danish people in the assembly, have hired Saatchi and Saatchi to spend about £2½ million—British taxpayers' money—to sell the Common Market in Britain. That is daft, because the European Parliament, the Commission, the Foreign Office and the so-called European movement have already spent money doing that. At any conference one is cascaded with free colourful documents inviting one on trips to Brussels and Strasbourg.
If they started in a small way, the Government could initiate a real inquiry into the vast sums being spent so foolishly to try to sell the Common Market as an institution. Despite all the money spent trying to persuade the British people that the Common Market is a rational and sensible organisation, they are still not convinced. We must remember that people are not daft. The people know the score and, despite the expenditure of millions of pounds and all the activities of slick firms such as Saatchi and Saatchi, the people of Britain are not misled by such silly propaganda.
Although my right hon. Friend the Financial Secretary is always fair, it is not enough to have this debate each year. We must have some guidance from the Government about how we sort out this lavish approach to the spending of public money.
I hope that all, irrespective of political views, will appreciate that many of us find it worrying and sad that important items of public expenditure are prevented, or delayed because of pressure on the public purse. Irrespective of our views, we are all aware that fast decisions are sometimes involved. I would not mind if the same rules applied to the careful management of public funds. I believe that what is going on in the European setup has to come to an end if we are to have the same prudent and sensible approach to the expenditure of public money for which the Government have a name.
I hope that the Financial Secretary will give us some guidance on how the problem is to be resolved. I believe that the only way is a special effort by the principal administrators—soon. If that does not happen, the European assembly and Commission will continue to give democracy a bad name. That should worry us all.

Mr. Nigel Spearing: The hon. Member for Southend, East (Mr. Taylor) emphasised the extent to which the pipes of the EC are leaking gravy all over the place. Those of us who have not been very keen on the organisation have been justified to some extent. It is clear that a large majority of those who are now actively advocating continued membership of the European Community have some direct or indirect financial interest in the arrangement.
It is not only a matter of inefficiency. When money is being made available irregularly on such a scale, there must be at least some suspicion that it is not always ending up in the right quarters. Those who wish to see proper respect for European institutions have an important job to ensure that these issues are dealt with and that that is done quickly. It is all very well for the hon. Member for Cheadle (Mr. Normanton), who is a Member of the European assembly, to say that we do not know all the facts and that in any event certain things are happening in this country. He was not courteous enough to tell us what action he intended to take, although I understand that he bears some responsibility. I am sorry that the hon. Gentleman has left the Chamber.
Some of the EC's institutions are not directly accountable even to the Council or the Commission. We know how even official information offices run footloose with funds. Even messengers and secretaries have entertainment allowances. When one considers what happens in the olive oil pools and the intervention store agencies, the mind boggles, especially against a background of the flamboyant misapplication of public funds in the more official bodies.
Under the heading "European Schools", the report says in paragraph 12·6 on page 108:
The Court recommended a thorough-going review of the systems governing the payment of salaries, with particular reference to the question of computerization, and urged the Board of Governors to review the schools' financial regulations and instructions in a number of respects. It also looks forward to learning what action the Board of Governors intends to take following presentation by an independent expert of a report on the schools' internal control problems.
I think the House will recall that in previous reports it has been stated that the financial control of the so-called European schools, which are not only for officers of the European Communities, has been far from satisfactory. Extremely lavish salaries are paid and the schools are very well funded.
At page 205 of the report we find the reply from the Commission. Paragraph 12·6 states:
Although by virtue of the Statute of the European Schools these criticisms are not directed at the Commission, it has taken note of them and conveyed to the Board of Governors of the European Schools the concern expressed by the Court of Auditors which it shares.
When are we to get a reply? What happens to those criticisms and referrals? Do they merely go into the sand?
It appears that the European schools are not even accountable to the Commission. If they are not accountable to the Commission, are they accountable to the Council? I infer from the report that they are not accountable to anyone. The court can huff and puff year by year and the Commission can shrug its shoulders and say "It is not up to us. The statutes do not apply to our control of the governors of the European schools." Whom


do the statutes apply to and who is accountable? If the Commission is not accountable, should not it be made to be?
My hon. Friend the Member for Blackburn (Mr. Straw) outlined some of the notable features of this sad report. It is ironic that they are being debated under the name of the Financial Secretary to the Treasury, the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley). The right hon. Gentleman has been opposed to public expenditure and much in favour of proper controls. I see that he nods. Let him exercise his considerable talents and ingenuity in chasing up some of these matters, which ideologically he would be only too pleased to do.
I was rather surprised by the terms of the explanatory memorandum submitted by the Treasury and signed by the Financial Secretary on 10 February 1983, which tells us about this report. There is nothing in his memorandum to lead us to suspect the irregularities to which my hon. Friend the Member for Blackburn referred. Paragraph 11 states:
The Report is the main document which the Council takes into account in deciding whether and in what terms to recommend that the European Parliament grants discharge to the Commission in respect of the implementation of the Budget.
I wish to draw the attention of the House to the procedure which must now take place and ask the Financial Secretary some questions. The motion that he has moved
supports the Government in seeking to ensure the sound management of Community finance.
How will he ensure sound management of Community finance, because he has only to grant or not grant a discharge certificate? As I understand it, we have had an auditors' report every year and the Council of Ministers has granted such a discharge. Will the Financial Secretary say, if not tonight, perhaps he will write to me, whether this discharge certificate is taken as an "A" point or whether it is discussed by the Ministers?
As a member of the Scrutiny Committee I asked the right hon. Gentleman's predecessor, the present Secretary of State for Energy, about this matter some time ago and it appears that in the past the Council of Ministers never had the discharge certificate on its agenda formally. It has been nodded through by the Committee of Permanent Representatives. If that is so, it shows considerable neglect by Treasury Ministers. They count candle ends, cut hospitals and schools and do all kinds of terrible things in this country, and yet the discharge of the EC Commission accounts—in the past, at least—has been left to the Committee of Permanent Representatives and has not been discussed by the Ministers. That is what I have been told, although it may not be correct. I hope that it is not, but I trust that the Minister will tell us in his reply whether that has been the practice and, if so, what he intends to do in the future.
The Financial Secretary owes it to the House to say when the Finance Council will meet to discharge the audit board report. Will it be next week, or next month? Will the subject be on the Council of Finance Ministers' main agenda and, if so, what points will he raise at that meeting, or will he tell us that he will not raise anything? I suggest that he is under an obligation to tell the House that he will raise the subject, if only to go into some of the points raised by my hon. Friend the Member for Blackburn and by the hon. Member for Southend, East.
Would it not be a good idea to withhold that discharge certificate for a while and for some of the Council of

Ministers to confer with the auditors or call in officers of the Commission and ask them questions? Cannot the Council of Ministers act as its own Select Committee and take up certain points, because if it cannot I suggest that the Council has no proper control over the funds of the member states that it represents, and if that were so it would be quite improper and unconstitutional. We know that the EC is not punctilious in its constitutional procedures, but I suggest that the Financial Secretary to the Treasury is capable of investigating the misappropriation of public money in this way. He would have plenty of opportunity in this forum.
I hope that the right hon. Gentleman will tell us when the discharge is to be given and what he intends to do at that time. I understand that the effective instrument is the discharge from the European assembly and that all that the Council of Ministers can do is to make a recommendation to the assembly. That makes the Council's role more significant, because it is clear that the Council can make comments when recommending a discharge.
In the past, the recommendation has been formal. I suggest that this year the Financial Secretary should write his name into the annals of the EC by ensuring that strong recommendations are sent to the assembly so that it takes into account the Council of Ministers' views before granting a discharge of what is becoming an annual scandal.

Mr. Tony Marlow: Many right hon. and hon. Members will have noticed on the news agency tapes that alarm bells are ringing at the Brussels meeting this evening. My right hon. Friend the Prime Minister is rightly doing what she can put right the desperate situation in the Community budget and particularly the injustice perpetrated regularly against the United Kingdom.
We hear that the French President is reluctant to cooperate and that he believes that the only way that we can move forward is by increasing the own resources and source of funds of the Community. It is clear from what we have heard in the debate and what we have seen in the report of the Court of Auditors that it would be a fantastic dereliction of duty for the House to permit a single extra penny of British taxpayers' money to go to the Community.
I should like my right hon. Friend the Financial Secretary to tell the House and President Mitterrand that the Government will not authorise, think about or talk about the possibility of increasing the own resources of the Community. If the Government made the mistake of moving in that direction—it is unlikely that they would—the majority of the House would implacably oppose such a move. I say to President Mitterrand that, if he wants to move in that direction, the entente cordiale will be seen in retrospect to have been an aberration and we in Britain will revert to our traditional view of the French.
I notice that between 1976 and 1981 expenditure on the Commission—the bureaucracy—doubled, expenditure on the common agricultural policy doubled, expenditure on the regional and social funds, from which we are said to benefit more, trebled, though it is still puny, and expenditure on the European assembly quadrupled and far outstripped increased expenditure on any other institution or fund in the Community.
I remind the Financial Secretary that the Prime Minister, when addressing the House on the subject last Thursday, referred to the institution as an assembly. That is what it is. It is not a Parliament or a legislature. Let us get it right and be consistent. It is a European assembly. It may wish to be a Parliament. That is one of the great dangers. As my hon. Friend the Member for Southend, East (Mr. Taylor) said, some talented people, with ambitions, time on their hands and taxpayers' money at their disposal, wish they were not members of an assembly and wish to acquire the powers of a Parliament. We see that day by day, before our very eyes. Let them not get away with it. Let us remind them that they are not a Parliament and never will be, and are merely an assembly. In the year 1981 they spent £100 million of taxpayers' money. As the hon. Member for Blackburn (Mr. Straw) said, there is no procedure for informing the authorising departments that their financial decisions have been correctly applied. Someone authorises the expenditure of £100 million and someone completely different somewhere else decides how to spend £100 million.
There is no control, no link and no proper safeguards on how the money is spent. Payment of remuneration—cash stuffed into people's pockets—takes place without the accounting officer receiving authorisation from the authorising officer, which has first been approved by the financial comptroller. Money is paid without authorisation. Where is that money going? Where is the control? How can we in the House allow British people's money to be spent in that way? We would not do that with our own public money. How can we do it with European money? How can we contemplate any addition in own resources such that more British people's money would be spent in such an appalling and unsafeguarded way?
If one looks at some of the details of the expenditure, one sees that some 1·3 million ECUs, which amounts to about £7,000 or £8,000, has been spent on Members' allowances, when they have been going to parliamentary committees, political groups and so on. Some £13,000 is spent per meeting, and there is £350 of expenditure for each Member of the European assembly as they globe-trot from one end of the European Community to the other. Venice cost twice as much as anywhere else. Why on earth did they have to go to Venice, and spend twice as much Community taxpayers' money, to have their meeting? Why can they not settle down in one place to have all their meetings and get on with it? What do they think we are—people doling out largesse so that they can indulge in their every single whim?
I ask my right hon. Friend two questions. My first is on the money that will be given to the European assembly and to the political parties to be spent on the forthcoming European elections. It is a matter of grave concern to many right hon. and hon. Members on both sides of the House how the money will be accounted for, for what other money it will be a substitute, and what effect it will have on the feelings of political parties here on how we should deal with the Community when that useful amount of money is made available to us. It is unconstitutional and should not be permitted.
Secondly, I know that my right hon. Friend has no power over the allocation of Community funds. Will he follow seriously the point that was made by my hon.

Friend the Member for Southend, East? Because of the constitutional implications, the ambitions of other institutions within the Community to effect their policies within the United Kingdom and the dangers to the sovereignty of the United Kingdom, will he set up an inquiry and a study urgently into the expenditure of Community funds in the United Kingdom? That is of the essence. I hope to hear a positive answer from my right hon. Friend.

Mr. Ridley: More questions have been raised in the debate than I can possibly answer in the short time left to me, but I shall do my best.
My hon. Friend the Member for Southend, East (Mr. Taylor) is right in saying that Members of the European Parliament are seeking as hard as possible to come here. I wonder whether that fits with his view that the pastures in Strasbourg and Brussels are so lush and that the aspirants to the House are so puritanical and shocked by what they see that they would prefer to come here. That might be evidence that life is not so cushy in Strasbourg as my hon. Friend and many others suggested.
I assure the House that we have in the Court of Auditors perhaps the finest instrument there would be for finding out those things. I am happy to say that this country was instrumental in getting the Court of Auditors set up and developing it and now in having for the first time, two years running, a debate on the report. Such a debate gives publicity to the many points that have been made by hon. Members in a way that can only be good for controlling such excesses and such things as have gone wrong in the European institutions. A great job has been done by the Court of Auditors. As the hon. Member for Farnworth (Mr. Roper) said, the fact that we alone among the Common Market countries debate these issues can serve only to ensure a more rigorous climate for the conduct of affairs, and that can only be for the public good.
This should not be a cause of complaint, either for this Government or for the Community. The more that these things are exposed—and they have been exposed extremely successfully by the Court of Auditors—the more the House ought to be grateful.
I do not know what the ratio of improper expenditures of public money in this country is compared with public money in the EC, nor do I know the ratio of exposure by our Public Accounts Committee compared with the Court of Auditors. But, without knowing all the facts, it seems hard to blame Europe for what has been exposed by an effective Court of Auditors.
I shall give the hon. Member for Blackburn (Mr. Straw) any information he wants about the cost of our budget refunds. He quoted financial years and gave the total budget for the Community, excluding overseas aid. It might help if I gave calendar year figures for our net contribution on the allocated basis. In 1980, it was 337 million ECUs. In 1981, it was 12 million ECUs. We do not yet know the figure for 1982, but on a first estimate it is likely that the figure will be between 850 million and 900 million ECUs.
The Council has asked that staff salaries should be restrained. With effect from July 1981, a levy has been imposed to reduce the pay award for Commission staff. The British Government pressed for this to take place, and it has now been redressed.
As to the famous holiday camps, the Council has also asked that in future the appropriations entered under this article are used for category C and D officials only—that is, the secretarial and ancillary staff. The Commission has stated that steps have been taken to shorten the time needed to recover the funds advanced. Again, the Council is taking action.
The hon. Gentleman also referred to the concern expressed by the court about pigs crossing backwards and forwards across the Irish border. The existence of MCAs provides an opportunity for fraudulent profits, and what he said has been taking place. Pigs can be smuggled across the border in one direction and re-exported, thereby claiming an MCA refund. However, I am happy to say that the United Kingdom and Irish Governments have tightened up customs control on the border, without the Commission's prompting, and it is thought that this, too, has been brought to an end.
I must tell my hon. Friend the Member for Cheadle (Mr. Normanton) that, if we were to budgetise the funds presently outside the budget, such as the funds for the European development fund, that would not of itself improve control, but it would have serious implications for our net contributions as they are currently financed by direct contributions where our share is less than for the general budget. I therefore hope that he will not press that point too hard.
Reference has also been made to the interest on the 29 million ECUs on the late payment of our own resources, which was waived by the Commission. That is something for which we should be grateful. That interest relates to the disputes over the 1980 and 1981 budgets. The Commission's position, which the Council endorses, is that the interest accrued as a result of a political dispute and that the dispute might have continued even longer if the interest had not been waived. The Commission was therefore acting within its area of competence.

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question pursuant to Standing Order No. 3 (Exempted Business).

Question agreed to.

Resolved,
That this House takes note of the Annual Report from the Court of Auditors concerning the financial year 1981, together with replies from the Institutions (Official Journal of the European Communities C344 dated 31st December 1982) and supports the Government in seeking to ensure the sound management of Community finance.

DENTISTS BILL [Lords]

Order for Second Reading read.

Motion made, and Question put forthwith, pursuant to Standing Order No. 66(4) (Second Reading Committees), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

STATUTORY INSTRUMENTS &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c.)

INDUSTRIAL DEVELOPMENT

That this House authorises the Secretary of State to pay, or undertake to pay, by way of financial assistance under section 8 of the Industrial Development Act 1982, as grants towards obtaining in the United Kingdom goods and services for each of the projects specified in column 1 of the Table below carried on by persons specified in respect thereof in column 2 of the Table sums which, together with the sum already paid or undertaken to be paid by way of such financial assistance, exceed the sum of £10 million but do not exceed the sum specified in respect of the project in column 3 of the Table.

TABLE


(1) Project
(2) Persons Carrying out Project
(3) Maximum Amount of Financial Assistance


Establishment offshore of production platforms and other installations with their equipment for the development of Beatrice oilfield.
Britoil pic Deminex UK Oil and Gas Limited
£11 million.



Kerr-McGee Oil (UK) Limited




LASMO North Sea Limited




Hunt Oil (UK) Limited.



Establishment offshore of production platforms and other installations with their equipment for the development of Fulmar oilfield.
Shell UK Limited
£13 million.



Esso Exploration and Production UK Limited




Mobil Producing North Sea Limited




Amoco UK Petroleum Limited




Amerada Exploration Limited




British Gas Corporation Texas Eastern (UK) Limited.



Establishment offshore of a production platform and other installations with their equipment for the development of Maureen oilfield.
Phillips Petroleum Company UK Limited
£25 million.



Fina Exploration Limited




AGIP (UK) Limited




Century Power and Light Limited




Ultramar Exploration Limited




The British Electric Traction Company Limited.



Establishment offshore of a production platform and other installations with their equipment for the development of Murchison oilfield.
Continental Oil Company Limited
£12 million.



Gulf Oil (GB) Limited




Gulf (UK) Offshore Investments Limited




Britoil pic.



Establishment offshore of a production platform and other installations with their equipment for the development of North Cormorant oilfield.
Shell UK Limited
£12 million.



Esso Exploration and Production UK Limited.




—[Mr. David Hunt.]

Question agreed to.

Mr. Deputy Speaker (Mr. Bernard Weatherill): In order to save the time of the House I shall put together motions 6 and 7 on the Order Paper.

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c.)

REPRESENTATION OF THE PEOPLE

That the Representation of the People Regulations 1983, dated 14 February 1983, a copy of which was laid before this House on 22 February, be approved.
That the Representation of the People (Northern Ireland) Regulations 1983, dated 15 February 1983, a copy of which was laid before this House on 24 February, be approved.—[Mr. David Hunt.]

Question agreed to.

Petitions

Telecommunications Bill 1982

Mr. John Golding: This afternoon Miss McKinley, in the presence of Mr. David Norman of the Post Office Engineering Union and other officers of the British Telecom unions, presented to me two petitions. Miss McKinley assured me that there are over 200,000 signatures on these petitions, which were delivered to me in two very large sacks. I wish to present them to the House this evening.
The first petition reads as follows:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament Assembled.
The Humble Petition of Citizens of the United Kingdom sheweth:
That the Telecommunications Bill 1982, if passed, will seriously damage telecommunications in Great Britain, now and in the future.
That the Bill is against the interests of the consumer, in that rural services and services to the domestic customer will become more expensive or disappear altogether.
That the Bill is against the interests of the elderly, the poor and the disabled, in that vital lifeline services provided by BT will no longer be available to them at a price they can afford.
Wherefore your Petitioners pray that your Honourable House do not pass the Telecommunications Bill 1982.
And your Petitioners, as in duty bound, will ever pray, etc.
The second petition reads as follows:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament Assembled.
The Humble Petition of Employees of British Telecom sheweth:
That the Telecommunications Bill 1982, if passed, will seriously damage telecommunications in Great Britain, now and in the future.
That the Bill is against the interests of British Telecom and its employees.
That the Bill will do nothing to enhance telecommunication services offered to the public.
That the Bill will result in higher prices for telecommunication services, especially for the rural customer and the domestic subscriber.
That the Bill is against the interests of the companies supplying BT and the workforce of these companies.
That the Bill is against the interests of the elderly, the poor and the disabled, in that vital lifeline services provided by BT will no longer be available to them at a price they can afford.
That the Bill will result in services such as telephone kiosks becoming more and more expensive or disappearing altogether.
Wherefore your Petitioners pray that your Honourable House do not pass the Telecommunications Bill 1982.
And your Petitioners, as in duty bound, will ever pray, etc.
I beg leave to present the petitions.

To lie upon the Table.

M1-A1 Link Road

Motion made and Question proposed, That this House do now adjourn.—[Mr. David Hunt.]

Mr. Reg Prentice: I wish to raise a matter of deep concern to some thousands of people in my constituency who resent the proposal to build a new trunk road through unspoilt countryside from the junction of the M1 and M6 eastwards towards Kettering and beyond. I shall refer to that as the green route, the title by which it has been known for some years.
My constituents accept—and so do I—that there is a need for the improvement of east-west road communications in the midlands, especially for industrial traffic from the midlands to the east coast ports. They believed, however—and so do I—that an alternative strategy based on improving existing roads could have been carried out by now and that the case for such a strategy is better informed and better argued than anything that we have yet heard from the Department of Transport.
If the green route is so important in solving transport problems in the midlands, we are puzzled that the proposal has been hanging about for 10 years or more and will apparently take another five years to complete. If the Department of Transport ever had a strong case for the new route, it should have been built by now. If the case is only marginal, based on the balance of argument, the Department should drop the proposal in deference to the overwhelming views of people in the area.
On 25 November, the Government published draft schemes for the work, followed by a three-month period for formal objections which elapsed some weeks ago. To my knowledge, the objectors included Daventry district council, 32 parish councils, the Council for the Preservation of Rural England and a large number of other organisations and individuals. The reasons that they give are numerous, but I shall emphasise just three for the purpose of the debate.
First, there is the environmental objection. A beautiful area of quiet villages would be seriously damaged if a major road were driven through it. There would be major damage to villages on or very close to the route and lesser, but significant, damage to dozens of other villages within a few miles north or south of it.
Secondly, there would be a great loss of farming land. In reply to a parliamentary question on 2 December, my hon. Friend the Under-Secretary of State stated:
In all, 108 farms would be affected in some way."—[Official Report, 2 December 1982; Vol. 33, c. 280.]
Thirdly, there are serious objections by the Society for the Preservation of the Field of the Battle of Naseby, by other historical societies and by individual historians, many of whom have written to me and, I believe, to other hon. Members, Indeed, several of my hon. Friends have expressed anxiety about this, and the matter has also been raised in another place.
If the road went north rather than south of the village of Naseby, as it almost certainly will if it is built at all, it will affect the battlefield to some extent. In a recent letter, the chairman of the preservation society points out that the battle included fierce fighting adjacent to and within the village, so any road to the north of the village would affect the battlefield area. Those of us who are interested in history that has such a direct bearing on Parliament should be worried about that aspect.
What is the alternative? I mentioned in passing that it is based on the improvement of existing roads. Naturally, there have been different versions as the subject has been discussed for several years. I shall not burden the House with too much detail, but the strategy has had two prongs—a northern one and a southern one.
The southern prong is the improvement of the A45 route which, to a considerable extent, has already taken place as a result of the initiative of the Northamptonshire county council. Further improvements are planned. Therefore, it could shortly enter the route that is proposed by the Department of Transport at or around the village of Thruxton.
The northern prong involves the improvement of the A427 which passes through the southern part of Leicestershire. Leicestershire county council could and, I believe, should have improved that road some time ago. The villages along that road need bypasses. The Department could still choose that option, and, if the county council will not co-operate, the Department could declare the road a trunk road and do the work itself.
As I said, there is more than one version of the strategy. I should especially like to draw the attention of my hon. Friend the Under-Secretary to and ask for her comments on, if she can give any, the proposals that were recently put to her by county councillor Bill Morton who was the chairman of the highways committee of Northamptonshire county council while it was under Conservative control. In some ways, his proposal is a compromise between what the Department has advanced and the alternative strategy. It relies on the A427 as far as Market Harborough and then the A6 to the vicinity of Kettering. It would also involve a different route to the west of Catthorpe. That is probably the best option.
My reason for raising the debate is to object to the green route as it stands. I do not regard myself as a sufficient authority on the subject to go into too much detail, but I believe that the Morton proposal is probably better than previous alternatives and it goes further to meet the Department's legitimate case. The Department should study it in depth to see whether it can settle along those lines.
The advantage of the alternative strategy, whether the Morton version or the earlier one, falls under four headings. First, it would avoid the objections to the green route which I have already listed. Secondly, it would be cheaper. In reply to another question on 2 December, comparing the cost of the Department's proposals with that of the alternative strategy, my hon. Friend said that the alternative strategy would be £20 million cheaper. That is more than the gap admitted by the Department when I corresponded with it a few years ago. The gap has widened because the A45 is developing anyway, irrespective of whether the green route goes ahead. For that reason, the gap could widen further still.
Thirdly, it seems likely that the alternative strategy could be achieved more rapidly and thus provide quicker assistance for motorists and industry in the midlands. Fourthly—this is very important—it would be more acceptable to public opinion.
Judging from conversations and correspondence with my hon. Friend, I imagine that she may tell us that the green route would be better for traffic management, because traffic coming eastwards from the west midlands, perhaps along the M6, would cover the route more quickly. It would cut some minutes off the journey

compared with the alternative strategy. However, with the Morton plan, any such difference would be minimal. Even if there is a slight saving in time, traffic management is only one factor in making the decision. It must he weighed in the balance together with the environmental and other factors that I have mentioned.
My hon. Friend may also say that people will always object and that, if the Government had listened to every environmental objection to every new road, no major new road would have been built in Britain. That may be true, but each case must be argued on its merits. When there are serious environmental and other objections from those who live in the area affected, the onus of proof is on the Department to try to convince them that there is an overwhelming case for building the road. In this case, the Department has not begun to convince my constituents. If my hon. Friend persists with her present plan, and the matter must go to a public inquiry, it will be fought hard and with high-level advice. Daventry district council is employing an expert consultant, as is MALRAC, the action committee opposed to the road. The inquiry will be a long and expensive business. If the alternative strategy were followed, there might be some objections, but there would be much less controversy and any inquiry would be more rapid and much less expensive. My hon. Friend should try to avoid such an expensive and long-winded process. She could lift the threat from the community that is affected by the plans. I appeal to her to charge course now.

The Under-Secretary of State for Transport (Mrs. Lynda Chalker): I welcome the opportunity provided by my right hon. Friend the Member for Daventry (Mr. Prentice) to discuss this important and much-needed scheme. Although there is clearly real concern about the route that the link road should take, few would disagree that such a link is necessary. For too long now, the absence of a direct, high-quality east-west route for the growing volume of traffic between the midlands and the rapidly expanding east coast ports has left a serious gap in the country's road network. To the west of the M1, the M6 and the M45 give good road access to the industrial west midlands and the north-west, while east of the A1 the A14 now bypasses Huntingdon, and the A604 and A45 have been progressively improved, as my right hon. Friend said, to provide a dual carriageway route all the way to Ipswich. With the completion of the Ipswich western bypass, about which I hope to make an announcement soon, this high-standard road will continue to the ports of Felixstowe and Ipswich and will help access to the port of Harwich.
However, there is a gap between the M6 and the A1. There is at present no direct east-west road, and the existing routes are unsuitable for heavy lorries. Industrialists in the west midlands are convinced that a new road is essential for the future prosperity of the area. The east coast port authorities and many other authorities in east Anglia are equally convinced that continued growth depends on completion of the link. The residents of numerous towns and villages currently suffering from the effects of east-west traffic are pressing hard for action to relieve their problems.
From what my right hon. Friend said tonight, I think that our disagreement, such as it is at the moment, is over that section from the M1 across to just somewhere to the


west of Kettering. He was not seeking to oppose the rest of the green route going eastwards from that point over to Brampton. Therefore, I shall concentrate on the western sector of the M1-A1 link.
In addition to providing the direct access right across to the ports, there is the important need to improve access to Corby, and so encourage the industrial regeneration of the town. To a lesser degree, the same considerations apply also to Kettering. It is this section from the M6, therefore, upon which we need to concentrate our minds. I have so far heard of up to 10 alternative strategies. Many minor variants are being suggested, and that is why the public inquiry, which will have to be held, is needed to resolve the route, to hear the objections and to hear the views of people in the area who need to use the route.
Today, we have heard from my right hon. Friend of what I shall call the Morton route. It is a variant on the A427 route. The Morton route would go from the last junction along the M6, up the A426 and across the A427 to the north of Market Harborough and then down the A6 road and cut across to the north-west of Desborough and Rothwell, joining the Kettering road and the original green route to go round the south of Kettering.
This presents an alternative route, but the right place to argue this is the public inquiry, where the Department of Transport route and all the alternatives will be heard. My right hon. Friend has reminded us firmly that it is his conviction that the route that we have recently published in draft statutory orders is wrong. I know that that view is shared by many people who think that instead of building a new road between the M1 and Kettering, we should adopt the alternative strategy, or one of them, based largely on improvements to existing roads.
My right hon. Friend has spoken of the effect that the published route would have on the countryside and the amount of farm land that would be taken. He has also argued that the alternative strategy would be cheaper. I shall return to that point in relation to the Morton route. He has also referred to the possible encroachment of the Department's route on the battlefield at Naseby.
I appreciate the anxieties on all these issues and I take note of the concern expressed not only in the House tonight but in the letters received, particularly about the allegedly damaging effect of the Department's proposals. However, that is only one side of the story because, whatever the route, there are advantages and disadvantages that can be argued. Any of the alternative strategies will have disadvantages—as my right hon. Friend will know—as will any option suggested as an alternative to the link road scheme.
As far as I can be sure at the moment, and as I have been advised, the route suggested by Cllr. Morton suggests that the Kettering northern by-pass must also be included. When we look at that route and Cllr. Morton's suggestion that dualling should take place along the whole of the route, we see that the land take across that sector would be rather larger than the land take of the current green route from the M6 across to Kettering, presupposing that both routes have dual carriageways. It is also slightly longer. The costs, I estimate, will be about 10 per cent. more than those of the green route. Whatever is argued at the public inquiry, my right hon. Friend should be aware that according to the present view of what is known of the Morton route, it is not likely to be cheaper. The original

alternative proposals put forward by MALRAC and others which would have used the A 427, although not to the same standard, and the A 45 may have been cheaper but would not have fulfilled the traffic needs across from the M1 to the A1.
The Morton route, along with the other alternative routes, will be studied most carefully and scrutinised in great detail. We should not believe, however, that the creation of a new route to enable traffic from the west midlands and, indeed, the north-west to reach the east coast ports can be accomplished on the cheap. It has to be done properly to be effective.
The Department's green route—the completion of a direct through route—could be achieved, even with a public inquiry and assuming it were to be recommended by the inspector and accepted by my right hon. Friends the Secretary of State for the Environment and the Secretary of State for Transport, ahead of the time that the Morton route, or any alternative, could be achieved.
The preparation of the green route is much further advanced than either of the other two routes, however desirable my right hon. Friend states these routes to be. We would have to consider particularly the effect of the Morton route or the other alternatives for all those living near the busy A427 route. With the green route solution we estimate that 75 per cent. of the heavy vehicles would be removed from that road. With the Morton alternative or any of the others there would be a great increase of traffic in the area, although, as my right hon. Friend says, not through those villages. I do not think that the Morton route envisages that. It is designed to go around many of them. However, we have to consider the best and quickest means of improving access to Corby and to Kettering as well as to the east coast ports. The reason why we have alighted on the green corridor is well known. It was the Department's preference seven years ago. Each time that we have carried out full-scale reassessment of the route and compared it with the alternative strategies, with the exception so far of the Morton strategy, we have confirmed that the green route is the better route.
I wish to mention the landscape value of the country through which the link road would run. I do not think that the effect would be as devastating as my right hon. Friend fears. Certainly, everything practicable would be done to minimise the harm to the landscape in designing the new road. Advice has been taken from the Landscape Advisory Committee, which has twice visited the route. The effect of new roads on agricultural land is always regrettable, but, even though the published route would take 680 acres of agricultural land, the Morton alternatives would take about 401 acres in the area most concerned. The original alternative strategies would have taken over 325 acres of farm land. The taking of 325 acres of farm land would provide for only a single-carriageway scheme. It did not include the Kettering northern bypass. My figure of 401 acres for the Morton scheme also did not include the Kettering northern bypass which, if I remember rightly is another seven kilometres. The Government have made a deliberate effort to redesign the route to follow existing farm boundaries and to minimise disruption to farming in the area. We are already engaged in many discussions with the farmers affected and with the National Farmers Union.
I have made some reference to costs, and obviously more work needs to be done on the Morton alternative. It is about 10 per cent. more expensive than the green route.
The Government have carefully considered the question of the link road to the battlefield of Naseby. Hon. Members will recall that, when the preferred corridor for the link road was announced in 1975, the route to the south of Naseby was selected on the other side of Naseby village from the battlefield. At that time, the historical significance of the area proved to be the deciding factor. Detailed studies subsequently revealed that ground conditions were such that to route the link road south of Naseby on stable ground would mean its passing closer to the village of Naseby than the public had been led to believe at the time of public consultation. The information provided by the studies altered the balance of the many factors involved in selecting the route—the claims of the battlefield, the way the works would fit into the landscape, the effect on local residents, and economic considerations. Despite the adverse reaction to the change to a northern route, I have no doubt that in the circumstances it was right to review the 1975 decisions. That reassessment showed that a northern route would be shorter, cheaper and further away from Naseby. Furthermore, our study of the works of professional historians suggested that although a northern route would certainly cross an area where some fighting took place—the baggage area as I believe it is called—it would not affect the main battle area.
We concluded in the light of the environmental and economic considerations that it was right to propose a northern route in place of the southern route originally adopted.
But, because of the strong local and national interest in the battlefield issue, my Department will work up to the same standard plans of the best southern route for consideration alongside the published northern route so that the issue can be fully debated at the public inquiry later this year.
There are many points to be considered in this debate. My right hon. Friend has proved to me, above all, the need for a public inquiry. I know that views which are contrary to those of the Department, and different from any of the routes that have so far been put forward, will have a

thorough hearing at an inquiry. The outcome of such an inquiry can never be foreseen, especially with a scheme of this size containing many difficult issues, such as the effect on the battlefield of Naseby, ranging far beyond the area immediately affected.
Not until my right hon. Friends the Secretaries of State for Environment and Transport have jointly considered the report and recommendations of the independent inspector, and taken into account all of the objections and representations received, will they decide whether the schemes and orders for the link road should be made with or without modification.
I have made a careful note of the points made by my right hon. Friend in the debate and of all the submissions sent to the Department. Where further action is necessary, I shall see that it is taken. The debate has been most useful. It has brought into the debate the Morton alternative. I am quite sure that the Official Report of the debate will form a vital part of the evidence before the independent inspector conducting the public inquiry.
Whenever a new road is needed because of the change in our trading patterns, and because our trade has turned so much more towards Europe, we shall always face the difficulty of taking roads through areas previously unaccustomed to traffic. Whether it is the dualling or improvement of an existing carriageway or the building of a new carriageway, I assure my right hon. Friend that the need to make it fit in with the environment without disrupting the landscape and to minimise the take of agricultural land is just as much in the Government's mind as the economic considerations of the road's viability.
I thank my right hon. Friend for examining the issue tonight. I know that we shall exchange more information as the months go by. Eventually, public consultation and discussion will take place at the public inquiry which a route of this importance must surely have.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to One o' clock.